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Why choose a secured loan?

In the interests of "Treating Customers Fairly", it's important that you consider all the options available to your client.

Here's a few reasons why you should choose a Secured Loan

Traditionally there have been three main ways for a mortgage broker to raise extra cash for their clients – Remortgages, Further Advances and Unsecured Loans. However there are many reasons why these 3 options may not be suitable.

Remortgage

  • The client may be tied to a fixed / discounted rate and may not want to give up a low rate or they may face high redemption penalties
  • Possible valuation, broker and legal fees
  • Purpose of loan may be unacceptable
  • Can take months to complete
  • The client may be currently in arrears, in this case they could only remortgage with a sub-prime lender at a higher rate

Unsecured Loan

  • Normally restricted to a shorter term (1 - 5yrs) which can mean a high monthly repayment
  • All applications credit scored which often results in many declines
  • Advances normally restricted to £15k but in cases of adverse credit this can usually be far less

Further Advance

  • Lender may seek to increase current lending rate
  • Purpose of loan may be unacceptable
  • The applicant may be in arrears with their current lender or restricted by current lending criteria

Mortgage Brokers are now seeing the greater benefits of offering Secured Loans to their customers.

The benefits of a Secured Loan

  • Most legal purposes accepted as the purpose of the loan
  • Arrears considered on many plans
  • First mortgage can be left in unaffected
  • Quicker Completion time
  • Secured Loan could be arranged to enable the borrower to keep an existing mortgage rate
  • Clients can borrow between 5-30 yrs
  • More flexible criteria
  • Advances from £10,000 - NO UPPER LIMIT (on referral)
  • Low ERC's - 0 to 2 months generally
  • Broker fees / lender fees can be added to the loan