Secured Loans – The Facts

Secured Loans – The Facts

At Caboodle we believe that informed customers are more likely to become satisfied customers. To help customers understand more about the commitment they are making we have detailed the important facts about secured loans….

What is a secured loan?

A Secured Loan, also known as a homeowner loan, is simply a loan secured against the available equity in your property in a similar way to a mortgage. A secured loan allows you to release some of the available equity in the property to use for almost any legal purpose

What is “Equity” or “Collateral”?

Equity in a property, or collateral as it can sometimes be referred to, is the difference between the value of the property and the outstanding balance on any existing mortgage against that particular property. Lenders will then normally lend up to a certain percentage of that amount based on a number of determining factors such as personal circumstances, credit rating and affordability. The exact percentage available for your circumstances will be calculated by your adviser when you enquire.

Who is eligible to take out a secured loan?

If you are over 18, own your own property and already have a mortgage against it then you can apply for a secured loan.

Note: If you own the property but do not have a mortgage outstanding against it any amount you borrow will be treated as a “regulated mortgage contract”(mortgage) and processed accordingly. Your adviser will be able to explain more when you enquire and your requirements are known.

What fees are involved in arranging a secured loan?

As with any loan or mortgage secured against property there may be fees to pay for things such as valuations, solicitors and third party references. We will discuss the fees and options with you as you may prefer to add the fees to your loan.

What is the difference between a secured loan and an unsecured loan?

There are a number of differences between a secured loan and an unsecured loan, the main advantages of a secured loan being:

1. A secured loan is available for a much larger amount, generally up to £500,000

2. A secured loan can be taken out over longer periods of time, generally up to 25 years, meaning the monthly repayments are more affordable if you have a fixed budget to work towards. However, taking a secured loan over longer than you need to could significantly increase the total amount you have to repay over that term

3. As a secured loan is secured against property lenders are able to consider circumstances not normally considered by lenders providing unsecured loans. These circumstances can include customers with credit problems, customers with county court judgements (ccj`s) and defaults as well as customers who are self-employed or receive benefit income

What if you want to repay the secured loan early?

Many loans have no or low early repayment charges so you are not tied in for a specific period. However, there are certain types of secured loan that may have different charging structures. These are typically on loans for business purposes or loans secured on investment property. Your adviser will discuss these with you.

Frequently asked questions about secured loans

What if I have a poor credit rating, defaults, CCJ`s or mortgage arrears?

As a secured loan broker Caboodle have a number of lenders on our secured loan panel who offer a diverse range of plans so we are able to arrange finance for people with high levels of adverse credit as well as those with a perfect credit record

How much can I borrow with a secured loan?

This will depend upon a number of factors which include your income, your credit rating and the amount of equity available in the property you want to use as security. Your adviser will discuss all these aspects with you, and more, when you enquire

Over what time period can I take my secured loan?

A secured loan is generally available on terms between 3 and 25 years, although some lenders offer longer periods on larger loans

Can I protect my secured loan repayments in case I am ill, made redundant or die?

Yes, our advisers will discuss various protection options with you depending upon your individual needs and requirements

Is my secured loan application confidential?

Your secured loan application is treated in the strictest confidence. We will not contact any other party such as your employers, mortgage company or bank without your prior permission.

Can I use the money from the secured loan how I wish?

The proceeds of the secured loan are available for almost any legal purpose. Perhaps you want to pay off all your higher rate credit with a consolidation loan, leaving you with just one manageable monthly payment. Alternatively you may wish to carry out home improvements, purchase a car, caravan, boat, conservatory or perhaps take a well-deserved holiday!

What interest rate will I be charged on my secured loan?

There are many factors affecting how much you will be able to borrow on a secured loan and what rate you will be charged. During discussions with your adviser they will gather all the appropriate information needed to make the assessment for you and enable them to search for the very best secured loan available to meet your needs and requirements

How long does the secured loan process take?

A secured loan is normally completed with 3 to 4 weeks, although this is dependent on how quickly you return any required supporting documents following us making an offer of finance to you.

What if I want to borrow more money in the future?

If you require a further advance on your secured loan simply contact us and we will supply you with a quotation for the additional borrowing

 

Other important considerations

As with any financial commitment, borrowing money comes with responsibility as you will need to commit to paying back the secured loan each month until it is fully repaid. Therefore before taking out a secured loan you should ask yourself the following questions

Are the secured loan payments affordable?

Before you commit to any kind of loan or finance agreement you must be comfortable that you can make the regular monthly payments until you have repaid the debt in full, as well as being able to meet your other regular monthly outgoings

Is there a more affordable option?

In some instances it may be possible to restrict the cost of what you want to buy by getting a less expensive alternative instead. Although we always want the best, sometimes it is more prudent to be realistic with your decision making to ensure you are not over committing yourself.

For example, if you are looking to upgrade the family car, rather than looking for a brand new model why not try looking at second hand or nearly new vehicles as you could find an equally good alternative that meets all your needs, but at a lower cost?

Is it necessary to make this purchase now?

Sometimes things that we feel we need right now turn out not to be so important at a later stage. If you are considering taking out a secured loan for something that may be regarded as a luxury or an `impulse` buy it could be worth giving it some serious thought first.

What happens if I can`t make the secured loan payments?

It is important to consider what happens if you found you couldn’t afford to repay the loan during the term of the agreement. Clearly options are available to protect your payments to cover unforeseen circumstances such as accident or unemployment, but making sure the payments are likely to remain affordable in the future is also a priority.

Fees & charges will start to accrue for non-repayment and your credit rating will be damaged. CCJ’s (County Court Judgments) and defaults are just some of the consequences you could face for falling behind on loan or other finance repayments. As a secured loan is secured against your home, you could risk having your property repossessed if you can no longer afford the repayments on the loan, or your mortgage.

 

Whatever your circumstances Caboodle help a wide spectrum of people as we have access to many loan plans tailored to your individual situation and needs. We also have access to a wide range of remortgage plans which your adviser will be able to discuss with you if you feel this option may also be of interest.

Following some changes in regulation, Secured Loans are now commonly referred to as “second charge loans” or “second charge mortgages”. This terminology may be used when we speak to you about your requirements and in documents you receive as part of the process.

The secured loans process is simple, either complete the short online enquiry form and a Caboodle adviser will contact you, or call us at no obligation on 0800 151 2407 or 0121 308 9114.

 

Representative 9.2% APRC. Loans subject to status.

Representative example: Assumed borrowing of £20,000 over 120 months, with a borrowing rate of 7.1% per annum. There would be 120 monthly instalments of £250.95. Total amount payable is £30,114 comprised of; loan capital (£20,000); interest (£8,624); broker fee (£995); lender fee (£495). This would result in an overall cost for comparison of 9.2% APRC.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

Your initial consultation is free and you are under no obligation to proceed with a mortgage we recommend. There will be a fee for mortgage advice. The exact fee will depend on your circumstances and may be reduced depending on the loan amount and any commission we receive from the lender. It is estimated that the fee will be £595, but it may range from £495 to 1% of the amount you borrow. The fee is only payable on completion and can normally be added to the mortgage. This will be discussed and agreed with you before you make an application. Please ask for a personalised illustration.

Secured loan rates from 3.95% APRC, although we have plans available up to 29.9% APRC which allow us to assist customers with the most severe credit problems. The overall cost for comparison is 9.2% APRC. For secured loans a broker fee up to 10% of the loan amount borrowed may be payable on successful completion. A lender fee may also apply. The actual APRC available will depend on your circumstances. All loans are subject to status. Please ask for a personalised illustration.

The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

Caboodle Financial Services Ltd, registered in England at SQ2 House, 240b Lichfield Road, Four Oaks, Sutton Coldfield, West Midlands B74 2UD (number 08044670).
Caboodle Financial Services Ltd is an appointed representative of Pink Home Loans, Pink Home loans is a trading style of Advance Mortgage Funding Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 305008) for mortgage and non-investment insurance advice.
The Financial Conduct Authority does not regulate some forms of Buy to Let.

© 2014 Caboodle Financial Services Ltd