If you are facing the prospect of having your home repossessed, you may think there is no way to stop the process. However, there are options to consider that can help to stop repossession of you home.

There may be no more painful an experience in our society than home repossession. Having your family home taken away from you and sold because of a failure to keep up with mortgage payments is an unpleasant and demeaning experience.

As well as the stress and inconvenience of the act itself, there are also long-term personal and financial effects that can take many years to rectify. While it may seem like there is no way to stop repossession once a possession order has been made, there are options available.

Firstly, it is important to remember that lenders do not actually want to repossess properties. It is an expensive and drawn out process. Lenders are in the business of lending money, not property repossessions, and they are usually receptive to any alternative solutions that can be reasonably offered by the borrower.

Therefore, your first act in attempting to stop repossession is to contact your mortgage lender and try to come to an agreement for paying off your debts while being allowed to keep your home.

A second solution to stop repossession of your home is to refinance your mortgage and any other debts you may have. Many finance companies specialise in refinancing loans for applicants whose properties are at risk.

Another alternative, which is proving popular in modern times, is to sell your property for cash to any number of companies that specialise in solutions for stopping repossession.

The sale proceeds can be used to clear up mortgage arrears and pay off the balance of the mortgage. Such a solution can ensure that the potential repossession victim is not made homeless and will have every opportunity to make a fresh start.

Such a solution should also help to ensure that their personal credit rating is not plundered. This should help ensure that the recovery process is as quick and painless as possible.

It is therefore possible to stop repossession of your home through several different methods. The key to success is to act fast and do all you can to help salvage the situation.



Quick House Sale

With all of the mortgage problems that you hear about in the news lately combined with the lower interest rates we are seeing today, many people are wondering whether refinancing your mortgage is a good idea or not. Here are a few pointers that will help you decide of refinancing is the right decision for you.

Ignore the “Two Percent Rule”

Many people will say that you shouldn’t refinance unless you can get a mortgage rate that is two percent lower than your current rate. This rule oversimplifies the decision and only focuses on a single factor.

You need to realize that refinancing your mortgage is going to cost you money up front. You will need to pay fees to your loan originator, the lender, and possibly some third parties as well when closing the new mortgage. Because you are probably going to want this process to save you money, you should consider how long it will take you to recoup these expenses. To calculate this, add up all of your fees and divide that buy the savings that you will receive with your new monthly payment. This will give you the number of months required to recoup thee mortgage refinance expenses.

When deciding whether to refinance, you need to consider how long you plan on staying in your home as well. The longer you plan on staying, the more time you will have to recoup the refinancing costs and start saving money which makes refinancing your mortgage a better choice.

Refinance To Consolidate Bills

One of the main advantages of refinancing to consolidate bills is that you will get a tax deduction for the interest that you are paying on your debt. When you refinance your mortgage for debt consolidation, you are basically borrowing more money then you need to pay off your existing mortgage and using the extra money to pay off your other bills such as high interest credit cards, or car and student loans.

Adjustable Rate Mortgage

If you currently have an adjustable rate mortgage that is going to reset within the next couple of years you need to start thinking about refinancing now if you are concerned that you will not be able to afford the new payments, don’t wait until the last minute! Start doing some research now and look for the best person to originate your loan. Because of the current situation in the economy with mortgages, customers who have done their homework will be able to take advantage of this and get the best deal.



Quick House Sale

Every borrower aspires for a loan that seldom turns out to be a repayment burden. The borrower wants to repay loan in such a way that his or her finances are least stressed. Secured loans are one such way of borrowing a burden less finance for your personal purposes. In the UK, you will find plenty of lenders in the business of providing secured loans for specific purposes like home improvements, purchasing a new or used car, throwing a lavish wedding party, going to a long vacation tour or you can use the loan for debt consolidation. You are also free to make combined use of the loan for variety of purposes.

Secured loans UK are especially carved out for the UK people keeping their requirements and circumstances in consideration. Only those people who are capable of providing some property of good value as collateral to the lender are eligible for secured loans. Because of collateral, the borrower can drive home many advantages of the loan.

First of all, secured loans carry lower interest rate which is mainly responsible for easier repaying of the loan. Those who boast of a good credit history can find a suitable deal at reduced rate of interest as well.

You can borrow greater amount ranging up to £75000 in the UK as secured loans depending on value of collateral. What is more, such a greater loan can be repaid with ease as you have the luxury of choosing from 5 to 30 years of repaying duration as per your circumstances.

Secured loans in the UK are popular source of finance for bad credit people as well. Because of collateral, lenders have only remote risks and therefore they approve the loans for bad credit people with late payments, defaults, arrears, CCJs or IVAs without credit hurdles.

It is advisable that you avail secured loans from online lenders in the UK. Online lenders charge negligible additional fees and have lower rate of interest as compared to banks and financial institutions. Your home is at lender’s mercy, so repay the loan in timely manner.



Rent Back

For anyone with an investment property, now is not the time to be selling. After enjoying a period of growth, house prices are currently dropping amid concern of a credit crisis. However, those who can afford to hang on to their properties could see their investments serving them well in the future.

Areas of Yorkshire, Humber, London and the Midlands are the only places to have seen small property price growths but this is much reduced from last years figures. There has been a 13 per cent drop on the total amount of house sales in comparison to the previous year, across the country.

Mortgages are becoming increasingly difficult to get hold of. In fact, banks are beginning to turn away borrowers who are not already customers with them and turning down mortgage applications due to apparent lack of funds.

When you can get a mortgage, a good deal is even harder to come by with packages being withdrawn left, right and centre. This leaves many borrowers with no choice other than to take the banks standard rate mortgage, assuming they can get one, that is.

This situation has left many with no chance of getting on the property ladder and bringing about an influx of tenants and landlords. Like I said, for those with an investment property, things are looking up for you.

According to statistics, many more people are renting property than buying. This applies across the board, whether they be single professionals, couples or families. They all need your investment property.

Then, of course, you have the influx of immigrants who all need housing. Of the 200,000 immigrants arriving at our borders every year, all of them will need housing and virtually all of them will be in rented accommodation.

Thousands of homes are repossessed every day of the year and these unfortunate people will be looking for a home to rent. This is where your investment property becomes invaluable.

The UK has the highest proportion of single parents than throughout Europe and many will be looking for rented accommodation. Then we have the divorces where it is highly unlikely that both parties will be able to afford to buy another house. At least one member from each divorce will be looking for someone like you with an investment property.

Of course, it’s not all about cashing in on other peoples misery. People have always rented property and it’s only in the last fifty years or so that it has become fashionable for the average person to actually have a mortgage. Before that, you had the few landowners and property developers that would hold ownership of many investment properties and would rent these out to the masses.

Many people these days are unsure of where they want to settle. After all, the world is a much smaller and more accessible place these days. Many tenants will take time to travel, taking work experience in different areas and also taking up training and education in various parts of the country.

All these people are looking for someone like you with an investment property they can lease from you, so to give it up because finances are looking a little tight the world over would be ludicrous. These blips in the economy come and go all the time and if you can afford to ride it out, it would be wise.



Sell House Quick

Are you tired of these kinds of headlines?

 Thought so.

Just a year back, everything was fine and people were making money in business, on property and the stock markets. Today, you would be very fortunate if you did not lose money in any of these areas. In times like these, I ask myself, why bother saving?  The answer to that question is that you have to save if you want to see your children through to independence and then retire comfortably. And that, my friend, is the purpose of my blog. 

I will be posting comments on my little understanding on mortgages, loans, insurance and savings and investments in general. Hopefully, there will be other intelligent and successfull investors and businessman who will also contribute to this blog, so that all participating here may be wiser when it comes to handling their personal finances.

Here is my take, as a mortgage broker, on how we arrived at the present housing market situation.

The  federal funds rate which was around 6.5% in the second half of 2000, was slashed through out 2001 till by February 2002, it was about 1.75%. Rates were then more gradually cut till they reached 1% in April 2004 and though they started rising from July of that year, it was 2 years, July 2006, before they exceeded 5%. The Fed cut rates in 2001 to avert a recession, but inadvertently planted the seeds for the turmoil in the housing market today. As rates went down, mortgages became affordable and people who normally would not qualify for such loans, based on their incomes, suddenly found themselves being offered mortgages from banks. For large numbers of families, their dream of owning a home became a reality. There was only one problem in this scenario. The lending banks did not ask the borrowers to prove that they would be able to maintain their mortgages when interest rates eventually rose. It was then about this time, that foreclosure rates started rising.

There were other factors as well. The banks came up with self certification mortgages which did not require any proof of income. They would accept the income stated on the application form with out running any checks, on the reasoning that they had the property as security or collateral. These mortgages came to be known as Ninja mortgages – No Income No Job No Assets, as customers who took out these mortgages probably would not have qualified if their circumstances had been looked in to with more diligence.  As foreclosures increased, property prices crashed. Many properties lost even more value on account of vandalism as empty properties inevitably suffer this fate. The end result was that families lost their homes, banks lost their loans and as financial sector shares crashed, shareholders lost a substantial part of their investment in these institutions.  Further, the problem was not confined to the USA only, as many banks frequently sell their mortgage portfolios or mortgage backed securities to other banks to raise capital. European and Asian banks bought many of these portfolios or securities as on paper they offered a very good return on their investment. Subprime mortgages are highly profitable as the interest rates levied from customers are quite high in line with the higher risk these mortgages carry. Nobody wants to be left out when there are profits to be made and so when the housing market in the USA crashed, European and Asian banks felt the pain. The net result has been that all banks have become extremely cautious in lending, not only to customers and businesses but even among themselves. Since lending generally fuels business and consumption, we now find ourselves heading towards a recession.

So how do we prevent this kind of a situation in the future?

I am no economist but the First Amendment grants me the right to make my opinion heard, even though it may be the dumbest thing you ever came across. So here goes.

The sole criteron for lending should be the ability of the borrower to pay back the loan and not the value of the property. The property should only play a secondary role in the lending decision.Mortgages should be granted only to customers who can prove a consistent and reliable income. They should not be granted on property values as these can fluctuate drastically or disappear completely. The loan can be quantified as a certain multiple of the total net disposable income of a family and no more. Another way arriving at the loan figure would be that the total net disposable income should be atleast twice the annual mortgage interest.  This would ensure that the mortgage installment on an interest only basis would be affordable even if the interest rate doubled. By disposble income, I mean the portion of the income left after all taxes and everyday expenses have been deducted. Banks should be compelled to do their due diligence and keep detailed records of their investigations before lending to customers. An independant body would then be responsible for monitoring mortgages and would have the power to impose penalties to erring lenders.

Purchasing a mortgage payment protection insurance policy should be mandatory for all borrowers. These policies pay out if the borrower is unable to work on account of accident, sickness or redundancy. They are usually two year policies and relatively cheap. They usually do not pay out in the first 6 months of purchase or where the person covered knew that he/she was going to be made redundant. In genuine cases, they pay out an amount covering the mortgage installment and utility bills. This payment provides some relief while the breadwinner looks for a job or recovers his health.

Finally, the lenders themselves could help avoiding such a catastrophic situation again. They could set up their own insurance company to guarantee the cost of  mortgages in default. The reasoning behind this suggestion is that a property rapidly loses its value once the lender forecloses and puts it on the market as explained earlier. It seems to me that it would be a much better proposition for the lender to let the family stay in the home and maintain it and advise and encourage the bread winner to sort out his problems. The insurance company would cover the cost of interest on the mortgage for a fixed period just like the mortgage payment insurance mentioned earlier. The insurance would only cover the basic interest cost of the loan to the lender and not the interest charged to the borrower.Also, the insurance company would do its own due diligence before selling the policy and shaky loans would probably be declined for cover.

In conclusion, I would say that most people are over optimistic on how much they can afford to borrow. It should be the lender’s responsibility to arrive at the right figure to lend so that neither they nor the borrower need suffer on account of inappropriate lending.

Thanks for reading and I hope you will let me have any comments, positive or otherwise, on my thoughts.

Zeke



Sell and Rent Back

Many business borrowers do not prepare adequately for the commercial mortgage business loan problems that are common in most business financing scenarios. By anticipating typical commercial loan difficulties, business owners are more likely to avoid potentially disastrous business finance consequences.

With rapidly deteriorating financing for residential investment property, overcoming business loan and commercial mortgage problems is even more important. This summary provides an introduction to four critical commercial loan factors and should assist commercial borrowers to better anticipate key business financing difficulties.

It is not unusual to find that business investment lenders and business loan brokers are not as forward-looking about business financing and investing difficulties as most borrowers would expect, and I have published another article about commercial lenders to avoid. The focus here is on four typical commercial mortgage loan and SBA business loan difficulties often overlooked by commercial lenders and borrowers.

Commercial borrowers should be prepared for commercial loan scenarios that involve unexpected business financing problems. With business financing there are several key commercial mortgage problems which should be avoided. Business loan problems are more serious and prevalent than many borrowers would imagine.

Some of these commercial mortgage business loan difficulties might be unavoidable, but in most cases these business financing and SBA loan challenges can be successfully overcome. Commercial borrowers will be poised to take proper corrective action if they are aware of common commercial loan difficulties.

Avoidable Commercial Real Estate Investment Property Financing Scenario Number One: Use of secondary business financing -

Many commercial borrowers want the flexibility to use subordinated debt (a seller second or other secondary financing) in order to acquire a commercial property or business opportunity investment with a smaller down payment. Many forms of business investing will not permit a seller second or other forms of subordinated debt. With a commercial loan via non-traditional business lenders, a commercial borrower can use subordinate business financing (including seller seconds) to reduce the amount of their down payment.

Commercial Mortgage Example Number Two: Sourcing-seasoning assets and seasoning of ownership -

Some commercial lenders will require borrowers to document the source of the down payment for a purchase (sourcing). Many business lenders require borrowers to document where down payment money is coming from, often for up to 12 months in order to provide seasoning confirmation. Ownership seasoning is determined by establishing a minimum period for ownership prior to being eligible for refinancing.

Such a problem will probably not deter all borrowers. When it does apply, business borrowers should insist on a lender without seasoning and sourcing requirements.

Business Financing Example Number Three: Commercial mortgage recall terms -

Business loan recall conditions will often allow the commercial lender to force the borrower to repay their loan before the normal loan expiration. If a commercial loan agreement does not include recall terms, such a possibility is not of immediate concern to a borrower.

Commercial lenders will routinely include recall conditions in a business loan agreement. The provisions which will prompt a recall will vary and typically include annual business lender monitoring of financial statements, tax returns and credit history. Without agreed income, tax returns and credit standards, the lender can choose to require the borrower to pay off the commercial loan within a very short period of time.

Contingency Plans for Business Finance Recalls: What to do about a commercial loan recall -

To avoid an unanticipated recall scenario, commercial borrowers would be wise to consider only commercial loans which do not have recall terms. For commercial borrowers who have recall provisions in their business financing agreement, it will be equally wise to consider refinancing their business loan or commercial mortgage before a recall occurs so that refinancing is accomplished when it is most appropriate for the borrower.

When borrowers receive a business financing recall, they must quickly obtain refinancing assistance. When reviewing commercial loan choices for refinancing, borrowers should attempt to exclude potential lenders that require recall terms.

Business Loan Example Number Four: Business financing that needs a long-term commercial loan -

Is long-term investing and financing really possible for a business loan? Some business investment lenders will only offer 5 years (or less) before commercial real estate financing will expire with a balloon payment due.

There are commercial mortgage programs which can provide long-term financing, even though many lenders will only offer shorter-term options for investment business financing. Longer-term commercial real estate financing will often be the critical difference that facilitates a successful business investment because a new business loan will not be required for many years and commercial loan payments will also be reduced.

Additional Commercial Loan Problems and Solutions -

Unfortunately commercial borrowers will frequently encounter commercial mortgage business loan problems similar to those described here. To better prepare for this, an advisable approach is to explore business financing resources that will facilitate a better understanding of complex commercial loan issues. The Commercial Real Estate Loan Guide and The Working Capital Management Guide are two examples of business finance resources that will provide possible solutions for many difficult commercial financing situations.



Rent Back Fast

There may be periods in a homeowner’s life when his or her personal circumstances change dramatically and it makes economic sense to sell the house as quickly as possible, thus releasing the capital that has built up in it. The reasons are many and varied and may include:

1. The breakdown of a relationship. Whether the partners in the house are married or not, there may be financial pressures caused by the breakdown of the relationship. One of the partners may have started another relationship, in which case they may require capital release in order to finance another mortgage or rental costs. Some of the Sell and Rent Back companies will buy the house very quickly, and rent it back to the remaining partner at a competitive rate.

2. The homeowner may have to move with his/her job, either within the UK or abroad. If this move is seen to be fairly permanent, then capital will be required to finance a new home in the new location. For those relocating or emigrating, some of the Sell and Rent Back companies will buy the house in as little as 14 (working) days.

3. If the homeowner has been in arrears with mortgage payments they could fear the prospect of having their home repossessed and see that a quick house sale would be a financially better alternative and enable them to avoid repossession.

4. Should one of the partners in a house die, the remaining partner’s income may be insufficient to cover the mortgage, then again, a quick house sale may be seen as a beneficial alternative to having the home repossessed.

5. In a falling house market, to sell your house now may be a shrewd move. If financial experts project that house prices may fall 20%, then the homeowner could take the view that selling the house quickly, without Estate Agent’s or Auctioneer’s fees, for as close to its current value as possible, will reduce the capital loss. The house could then be rented back at a competitive rate until the market is viewed to have ‘bottomed out’.

The average level of personal debt is increasing, and a quick house sale may be seen as one way of paying off all debts in one go. This is especially useful if you suffer a reduction in income which is viewed as a temporary situation. To sell the house, pay off the debts and live in rented accommodation for a while may be a sensible strategy. Indeed, with many of the Sell to Stay companies, you can sell your house quickly and rent it back at a competitive rate.

There are many routes to achieving a quick house sale.

1. Estate Agents – Estate Agents will always tell you that they can sell houses very quickly. This may be true when the market is rising and there is a lot of competition for every house, but when prices flatten, or indeed fall, houses stick and your ‘quick sale’ may be lost.

2. Auction – Auctions are the ultimate vehicle to value a property. Any property is only worth what another will pay for it, and an auction with many interested parties in the room will produce the best market price for a property with a very quick sale.

3. However, anyone who goes to an auction will be expecting a bargain – they view the items that go to auction as being ‘on-offer’ and only there because they have failed to sell elsewhere. You may not get a good price at auction.

4. Sealed Bid – Requesting sealed bids is another good way of valuing a property. However, the process suffers from the same market pressures as the previous two. From the buyer’s point of view, putting in a sealed bid when the market is rising is a worrying process, as he/she doesn’t want to bid too low for fear of losing it. This can result in some extremely over-priced bids. On the other side of the coin, in a falling market the worry is that the buyer may bid too high and end up with a home in negative equity. This results in the seller receiving a number of disappointingly low bids.

5. Sell and Rent Back – Sell and Rent Back companies will buy your house very quickly – many of them promise to buy it within 14 (working) days. They will give you 80% or more of the value of your house – but that’s it! You don’t have to pay the Estate Agent or the Auctioneer, just your legal fees. Furthermore, many of the Sell and Rent Back companies will allow you to stay in your home and rent it back at a competitive rate.

So if you need a quick house sale, you must try to strike a balance between speed and the amount of money you will receive from the different methods of selling your property.



Passive Income

One of the most unpleasant consequences of failing to pay your mortgage is “repossession” of your property. This is a problem that is affecting an increasing number of homeowners throughout the country.

The first notification will be from the lender warning of the consequences should you not keep up your payments on the mortgage. If your mortgage payments are not being kept up to date then the lender may decide to approach the courts to apply for a repossession order.

The threat of repossession is something that a growing number of individuals are facing today. This can be put down to a number of factors that will on the most part, include borrowers who overstretch themselves financially and subsequently struggle to meet their monthly secured commitments.

Runaway property prices have too played a part as this has made homes in many areas unaffordable for first-time buyers. Many stretch their finances to get a first foot on the ladder. Some will see this as an essential means for home ownership.

Debt campaigners have highlighted in recent months that a growing number of borrowers were unable to meet their mortgage repayments, with many of them first-time buyers who only recently climbed onto the property ladder.

The Citizens Advice Bureau said that nearly a million people had missed one or more mortgage repayment in the past year. Over two million said they were concerned that their finances may not stretch to cover their monthly debts.

Missing payments on the mortgage or secured loan is a serious issue which could lead to arrears and possibly repossession if matters are not dealt with.

The repossession process will start by the lender applying to the courts for a repossession order. It is unlikely that the courts will grant this on the first hearing. They will probably grant a suspended repossession order.

This suspended repossession order means that that the individual involved must abide by the courts ruling. This will include having an agreed a payment in place with the lender to reduce the arrears balance over a period of time.

If these payments are not being met, the lender can apply for the repossession court order. In this case the courts are more likely to take the side of the lender & grant the repossession court order.

If the repossession order is granted, the lender will attempt to sell your property quickly to recover their money. They typically use auctions and estate agents to sell your property, often discounted to attract quick buyers. When the property is sold, the lender’s account is cleared first.

Any surplus will be repaid to the homeowner. However, if there is any shortfall, the lender will attempt to recover it from the individual involved for a period of up to 12 years!

The important points to remember is that without taking action, these problems do not just go away. At the earliest possible stage the lender must be informed of any financial issues that may affect the monthly payments of the mortgage. Do not ignore letters, especially court papers and court hearings.

If this does happen to you, then you must contact the lender immediately and explain your situation to them. It may be possible that you able to come to an arrangement to ease the situation.

If you are having serious problems then another option to consider is remortgaging. If you have enough equity in your property then you might be able to switch lenders and start afresh.

So whatever stage of the repossession process you are, you do have options that you can explore. Just make sure you act quickly and keep your lender informed.



Quick Property Sale

Your home, given as security to a lender, is not sufficient for ensuring low cost on a secured loan. You should be taking different aspects of a secured loan into account in order to ensure a suitable deal, if low cost is the prime motive. Low cost secured loans make it possible to borrow money in such a way that repaying the loan is seldom a burden on your finances. Clearly, you can meet variety of expenses towards home improvements, wedding, holiday tour, buying a car with less cost involved. You can also use the loan for debt consolidation purpose.

Interest and lender’s fees make cost of a loan. Therefore for a low cost loan it is to be ensured that interest rate is low and lender’s fee also is reduced to minimum. So we can say that low cost secured loans are those loans which have low rate of interest and the lender have little additional fees.

Secured loans are usually of lower interest rate as these loans are less risky for lenders on taking borrower’s home or any other asset as collateral. But interest cost on a secured loan will be reduced when you go for Annual Percentage Rate [APR]. Apart from usual interest rate, APR also includes variety of fees that the lenders charge on processing loans. So it is not just simple interest rate, but you must look for a low APR. Lenders display their interest rate on secured loans which more or less is almost the same. You should therefore ask secured loans lender to show their additional fees as well. Compare these fees or charges for finding a low APR. This way you can avail Low Cost Secured Loans.

There are ways to reduce the rate of interest also. For instance, the rate gets further reduced if you take a secured loan against equity in home. Such a loan is safer for the lender. If you borrow an amount that is way below than collateral value than also the rate is lowered further. Your excellent or good credit history also can fetch you a low rate of interest on secured loans.

Online lenders usually have competitive rate secured loans offers. So they should be given preference for low cost secured loans aver banks and financial institutions who charge higher rates with additional fees. Ensure making extensive comparisons of low cost secured loans lenders so that you seal the best deal.



Quick House Sale

Secured loans can be an efficient short or long-term funding solution for UK homeowners. If you are in need of money and have equity in your property, you are eligible to apply for a secured loan. Secured loans are sometimes called “second mortgages” as they rank after your mortgage as security to the lender. Secured loans must be registered as a Charge on your property title at the Land Registry.

Why seek a secured loan rather than an unsecured loan?

The strong growth in UK house prices over recent years has meant that many homeowners have built up substantial equity in their properties. Secured loans are simply a flexible way for homeowners to release some of this equity. Compared with an unsecured loan, a secured loan has a lower interest rate as you are putting your home up as security. The lender will be very confident that the loan will be repaid. Another advantage is that secured loans offer more flexible terms of repayment than unsecured loans. For example, the loan term can be for a longer time period enabling your monthly repayments to be kept down. Secured loan terms can be from 3 to 25 years – it can sit alongside your mortgage if you wish or you can pay it off sooner. If you’re in need of a large sum of money, a secured homeowner loan can range from £5,000 up to £1 million. Unsecured loans are normally capped at £25,000.

What can I use a secured loan for?

A secured loan can be used for any purpose. A secured debt consolidation loan can help you refinance expensive debt, such as credit cards or bank overdrafts, on to a much lower interest rate. A secured home loan can be used to finance substantial home improvements to add value to your property, such as an extension or a new kitchen.

Why choose a homeowner loan rather than a remortgage?

A mortgage is your cheapest form of borrowing and if you want to raise a significant amount of money it is therefore logical that you should first consider a remortgage. However, your current mortgage may be arranged on advantageous terms or have an onerous early redemption fee. Redeeming your mortgage may just not make financial sense. In these circumstances it may be wise to leave your mortgage alone and use the flexibility of a secured loan, especially if the interest rate is only a little higher than your mortgage rate. Finally, a secured loan can be completed in less than 20 days – somewhat faster than a remortgage – and at a lower cost. Remortgaging normally requires that you pay certain fees, such as a discharge fee, a valuation fee, a title insurance fee or an administration fee.

Can I safeguard my loan or mortgage payments against unforeseen events?

You can take out payment protection against specific events, such as unemployment, sickness or disability through Payment Protection Insurance (PPI). Remember that PPI is not always suitable for your individual circumstances and independent advice should always be sought before buying this product. Should the insured event take place, the policy will cover your payments for a fixed period of time, such as 12 months. You should also consider buying sufficient life assurance such that in the event of the death of the household’s main bread-winner, the loan or mortgage will be paid off by the insurance company.

How can I apply for a secured loan?

You have the choice of going direct to the lender or going to an intermediary, usually a finance broker. If you have shopped around and know what you want, you can apply direct to the lender via phone, internet, post or walk into their branch office. If you prefer to seek the advice of a finance broker you may benefit from their expertise in deciding what product and which lender is most suitable for you. This will be particularly true if your circumstances are unusual and you require a specialist product. It is also possible that a finance broker can find you a better deal as some products are only available through intermediaries.

How long does the secured loan application process take?

Depending on circumstances and personal needs, you may obtain a secured loan within 2-4 weeks. But, of course, each case is different. Normally, the consent of the first mortgage lender is required to register the secured loan on your property title and so the lender is unlikely to proceed before consent is obtained.

What factors may negatively influence the secured loan application?

When you apply for a loan it is normal that you will be asked to consent to a search at a Credit Reference Agency, such as Experian or Equifax. The purpose is to avoid fraud and for the lender to assess your credit worthiness. Some factors may have an adverse effect on the secured loan application, such as:



Bankruptcy or Individual Voluntary Arrangement

Low income or self-certification of income

Mortgage or rental arrears

Frequent job changes

Frequent address changes

High indebtedness

Court judgments



But even with a poor credit record, you have a good chance of obtaining a secured loan providing you have plenty of equity in your property. However, you may be asked to pay a higher interest rate if your credit score is low.

Is it important to seek independent, impartial advice?

There are literally thousands of loan and mortgage products available. As we only tend to purchase financial products infrequently, you will not know which products are available or suitable without a serious research effort. For this reason, we believe that most people should seek independent, impartial advice, especially as mortgages and secured loans normally represent a substantial commitment. This should not cost you any more as the advisor is normally paid directly by the lender.

What are the drawbacks of a secured loan?

Although there are many benefits of a secured loan, there are some drawbacks that should be mentioned. In cases where a borrower fails to repay a loan, the property could be taken into possession and sold. Borrowers can also be tempted to borrow large sums for long periods without appreciating the commitment to repay a significant amount of interest, even when interest rates are low.

For more information, please visit http://www.burtplan.co.uk



Repossession