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The Secured Loans Revival.
Posted:June 24, 2010Comments:Views:2
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The three years of the recession reduced the once buoyant secured [link widoczny dla zalogowanych] loans sector to a shadow of it's former self.
Even although mortgages and remortgages also fell, it was not in as dramatic a fashion as secured loans which fell to less than 20% of their previous level.
Secured loans are also known by the other names of homeowner loans and second mortgages, and they have these names for reasons that are very [link widoczny dla zalogowanych] obvious.
The reason that they have the name, homeowner loan, is because only homeowners can apply, as these loans require an asset which is the residential property of the borrower. The name, second mortgage, [link widoczny dla zalogowanych] is because they are in fact exactly that, [link widoczny dla zalogowanych] in that they rank behind the current first mortgage on a property, and are registered at the Land Registry as such.
They were always a very popular method of borrowing for homeowners for a number of extremely good reasons.The first reason was that they had low rates of interest which before the recession started from about 5.9% [link widoczny dla zalogowanych] APR which was as good as remortgage and mortgage rates, and as such many homeowners opted for a secured loan instead of a remortgage as [link widoczny dla zalogowanych] they were quicker to arrange than a remortgage which [link widoczny dla zalogowanych] takes on average double the time to pay out.
Secured loans have a multitude of uses from home improvements to holidays, paying for a wedding, etc. etc.
Homeowner loans have also traditionally been used for debt consolidation which combines all credit card debts, outstanding personal loans, etc. into one much cheaper payment each month granting enormous savings.
Also unlike remortgages, they do not incur heavy early settlement penalties [link widoczny dla zalogowanych] if paid off early.In those pre recession days, a secured loan was a very common choice of loan for the self employed, as they did not require accounts, and simply wrote their earnings on a letter head which was known as a self cert, and was very useful for those who were unable to prove their income.
During the credit crunch, the underwriting became so restricted and greatly limited the volume [link widoczny dla zalogowanych] of homeowners who could apply.
The abolition of self certs of net profit meant that very few self employed homeowners could apply for secured loans if they did not have proper accounts. until now
Link Loans re entered the market and they were the first glimmer of hope for the self employed with the introduction of self employed loans without accounts for those only trading for a minimum six months period.
The equity is tight at [link widoczny dla zalogowanych] 60% LTV, but none the less it is a step in the right direction. Link also [link widoczny dla zalogowanych] accept applications from self employed applicants with a minimum age of twenty one, when before, the minimum age for a self employed [link widoczny dla zalogowanych] homeowner loan applicant was twenty five which does sound rather ludicrous.
Aol this gives hope for the future of homeowner loans.
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