Secured loans help pay the bills

Rising UK interest rates are starting to have the impact that the Bank of England has been looking for, and as a result many more people are desperately seeking to remortgage and lock themselves into fixed rate deals. However, some may have missed the boat and a rising number of mortgage applications are being turned down on affordability grounds. So what options exist for those who need to raise funds but are unable to extend their mortgage? Secured loans could be the answer.

Indeed, many people are turning to secured loans - often arranged through mortgage brokers - in an attempt to secure the funds that they require. Robert Sinclair, Director of the Association of Finance Brokers, says:

“Increasingly, mortgage brokers are using secured loans as an appropriate part of their advice to customers. It is also good to see that this is seen as a specialist area in many companies and they are encouraging staff to focus on this sector.”

Sinclair also points out that secured loans can be useful to those who have recently re-mortgaged and need extra finance but face potentially massive penalty payments for early redemption of their re-mortgage, or for those who do not have enough equity in their property.

One of the major advantages of secured loans in the UK is that repayments can be arranged over terms ranging up to 25 years. Although a significant amount of interest would be paid on a loan of that length, it gives a great degree of flexibility to the borrower, allowing them to choose the level of repayment they could afford by extending the term of the loan. In the case of paying off other loans or credit card debts, the repayment is likely to be very affordable in the short term and, at the same time, could significantly improve many household’s financial situations.

Secured loans can be used for just about any purpose, including debt consolidation, car purchase or to pay for a major holiday. They tend to be cheaper than personal loans due to the fact that the lender has security if the borrower defaults with their repayments.

As secured loans are only granted against property those with a poor credit history, even with county court judgements, are more likely to be successful in getting this type of loan than unsecured personal loans. If the cost of re-mortgaging is prohibitive, for example if you recently changed mortgages to take advantage of a new fixed rate deal and you now have unexpected expenses, then a secured loan could be the ideal solution.

Adam Singleton is an online, freelance journalist and keen amateur photographer from Scotland. His interests include travelling and hiking.