Secured Loans tips archive

Tip 1 - Secured loans to get you started:

Our first tip to realising the benefits of a secured loan is to acknowledge that the range and availability of products can make this form of borrowing extremely cost –effective. For huge numbers of borrowers, secured loans present viable, manageable and straightforward solutions to a range of funding requirements - as will become evident in our tips to follow. They can be quicker, cheaper and simpler than a remortgage; can be used for many purposes and a variety of customers with varying income sources and for many types of client.

Tip 2 - Cost cutting:

Secured loans are often more cost-effective than remortgages, and also enable borrowers to secure funding on either a second or first charge basis. These loans can typically be for amounts from £3k to £100k, over a 3-30 year period, with repayment plans that can be significantly cheaper and less restrictive than remortgaging. The total amount the client repays over the term can be less; with interest only charged on the additional amount compared to a new interest rate being applied to the whole balance of a re-mortgage.

Tip 3 - Keeping it quick:

A secured loan can have distinct advantages when compared to a re-mortgage. It is becoming more important for brokers and IFAs to understand the benefits a secured loan can offer. One of the major benefits is the speed of application, approval and funding. Secured loans from specialist lenders offer your clients the opportunity to get the funding they require within the preferred timescale, which cannot be offered by high street banks. CCA regulated secured loans can be typically completed within 17-30 days from the initial application rather than the 8-12 weeks required for a re-mortgage. Secured loans for business purposes can be completed in as little as 24 hours from enquiry to release of funds.

Tip 4 - Plenty of properties:

Brokers need to be aware of the scope of property that their clients can obtain finance for. Loans can be secured on many residential property types including home owner properties, tenanted properties, shared ownership properties, ex council properties and high-rise flats. The property can be of standard or non-standard construction, including precast concrete and timber framed construction. Typically, secured loans from £10,000 can be taken over 3 to 30 years with bridging finance often also available.

Tip 5 - More clients catered for:

Unlike high street banks, secured loans from specialist lenders can be much more flexible for a wide range of your clients. Look for lenders that cater for those who may have had difficulties obtaining credit in the past, as well as for those with an excellent credit rating. Many types of income including self-employed and those on DWP benefits are accepted. Cases from prime to those who are incompatible with other lenders’ criteria – even if your client has CCJs or arrears – can be considered.

Tip 6 - Simplicity is the key:

One of the major advantages of a secured loan over a re-mortgage is that a secured loan application typically involves a 1 or 2 page application form and instant ‘in principle’ decision; with completion normally occurring within 24/48 hours of the lender receiving all of the correct documentation. The typical mortgage application can be up to 20 pages and can take considerably longer to process. This not only makes it easier for your clients, it makes life easier for the broker too.

Tip 7 - Managing debt consolidation:

For some customers, managing finances can be problematic, particularly when they have several commitments to pay a wide variety of costs.

As debts start to pile up, a secured loan can allow a borrower to consolidate outstanding debts to avoid such headaches. This funding solution will enable the individual to pay off their existing commitments while restructuring their debt into one straightforward and structured payment arrangement.

Tip 8 - Innovate:

Lenders are now starting to return to the market meaning more competition (and choice) for secured loans. Brokers and lenders need to adapt their portfolio in order to cater for the customer base looking for suitable funding solutions.

The savvy brokers within the market will naturally add the most forward thinking, established lenders to their panel. The opportunity to create a sustainable secured loans market is there but it is the expertise and innovative decisions made by the market’s intermediaries and lenders that will make the secured loans arena what it has the potential to be.

Tip 9 - Grab the opportunity

As many high street lenders have tightened their lending criteria, traditional routes of funding are harder to access.

In the short-term, remortgages and other traditional funding options will remain difficult to access and as a result, secured loans are on their way to reforming a strong position in the lending portfolio.

Having said this, brokers and lenders need to work together to raise the awareness of secured loans as a feasible funding solution worth considering.

This will not only benefit the borrower by catering to their needs in this economic climate but also the brokers themselves who are more keen than ever to improve the offering to their clients.