What You Should Consider When Taking Out A Secured Loan
There are a number is things to consider before taking out a secured loan. Some of the main ones are: –
- Which sort of interest rate you are looking to take – this is a major point as interest rates can vary by significant amounts. Understanding the difference between fixed and variable interest rates is important before signing up to a product. When working out your available budget, consider whether you could afford interest rate rises. If not, you may want to consider a fixed rate, even if you must pay a small premium for it.
- How long are you looking to borrow the money for? Many second charge mortgages have early repayment charges. This means that to pay off the loan early, you must pay an additional charge, or ‘penalty’. If you’re looking to repay the loan within the first few years of taking it out, consider looking only at loans with no early repayment charges.
- Finally, and potentially most importantly, is the loan affordable? The consequences of failing to keep up the monthly repayments can be severe. As the loan is secured on your home, it is vital that you only consider borrowing money that you are confident that you can afford the repayments on, both now and in the future.
Finding The Right Secured Loan For You
There are thousands of secured loans out there and the difference between products can be significant. When looking to take out a new homeowner loan, it’s important that you find the best deal, as the cost of choosing poorly can run into the thousands.
The two main methods of ensuring you find the best deal are either talking through your needs with a broker. They will then check with their panel of lenders and offer you their best deal. Although they may be offering the best deal, be wary of broker fees, as they can add up to 12.5% in fees on top of the loan.
Secondly, using a comparison tool online, you can find the best deal yourself and apply online. Although the application is online, the details are usually passed to a broker to complete the application.
Most comparison sites usually receive a commission for completed applications and work with who will pay the most. this usually leads to high broker fees.
We offer both an online product comparison and direct access to our team of secured loan experts. We handle the whole process ourselves, meaning you don’t have to worry about us passing on your details to third parties.
In addition, we only charge a flat fee of £995 on completion. When compared to a fee of 12.5% (as offered through some companies), on a loan of £40,000, this would save you £4,005!
Secured Loans For Bad Credit
Secured loans are often a good option for you if you’ve suffered adverse credit. It’s often easier to qualify for a second charge mortgage compared to other types of loan if you’ve got a poor credit history.
Often, second charge mortgages are your best option as you can achieve much lower interest rates. In addition, the chances of being accepted are far higher than they would be for an unsecured loan.
Comparing the total cost of credit and whether you are happy to borrow against your home are important steps before borrowing. Our expert advisors are there to talk you through each step of the process and ensure you end up with the most suitable product.
Understanding Secured Loan Monthly Repayments
Taking out a secured loan can reduce monthly outgoings when consolidating debts. Although this is a real positive for many, the total cost of borrowing should always be considered when taking out a new loan. See our example below. It highlights how changing the term of borrowing to reduce monthly repayments, has a knock-on effect on total interest: –
£10,000 Loan At 3.9%
Secured Loan Broker Fees
Broker fees are a big issue in the second charge mortgage market, with lots of brokers charging 10% broker fees (£4,000 on a £40,000 loan). Some are even charging as high as 12.5% (£5,000 on a £40,000 loan).
At ABC Finance Ltd, we pride ourselves on never charging unfair fees to our clients. As such, we charge a flat broker fee of £995, with no hidden application fees.
Enquire now to talk through your needs with one of our experts, or call us on 01922 620008. Alternatively, compare secured loans here to find the lowest rates and apply online.