Wednesday, November 22nd, 2017
It is believed here at Caboodle Finance that secured loan advances in the UK (otherwise described as second charge lending) will continue to grow at a steady pace in 2018, just as it has throughout 2017, in our experience. Whilst the main reasons attributed to the ongoing demand for these secured loans are many and varied, below we briefly summarise some of what we understand are some of the most common reasons.
During the nineties and noughties, interest rates for such products were in the main at double digits. Given the current competitive nature of the second charge market, when the lower rates now on offer are combined with more flexible lending criteria available through some lenders, some prospective borrowers view secured loans as an attractive alternative to a re-mortgage.
Additionally, as many now fix their main mortgage deal for longer, borrowers have also been utilising second charge loans in addition to further advances for capital raising to avoid paying the early repayment charges that would have applied had they considered a remortgage during that fixed rate period.
Historically, many secured loans have been for debt consolidation. This is likely to continue given that debt consolidation is not popular with some mainstream mortgage lenders and even more so now that the industry regulator has the matter under review.
Poor credit history can also be a reason people still look towards secured loans rather than a re-mortgage when raising capital. This is because any higher interest rate (based on a perceived increased risk for any new lender) would impact only the new or additional borrowing and not total indebtedness (which would apply on a consolidated re-mortgage).
Generally, a second charge mortgage loan can be used for any legal purpose. The most popular reasons people use these types of loan are for credit consolidation and home improvements, however they can also be used for other things like paying a tax bill or raising the deposit for a buy to let property investment.
Furthermore, secured loans can be arranged using a buy to let investment property as the security; it does not always have to be the main residence.
Our team here at Caboodle Finance of Sutton Coldfield, Birmingham are here to advise you. If you would like to discuss your individual requirements or make a confidential, no obligation enquiry, call us today on 0121 308 9114 or alternatively click HERE to contact us.
Caboodle Financial Services Ltd
Mere Green House
46-48 Mere Green Road
West Midlands B75 5BT
Telephone: 0121 308 9114