FAQ for Secured Loans
Can I apply for a secured loan?
If you are a UK resident and you are homeowner or mortgage holder with enough equity in your property to serve as security against the loan then the answer is yes!
Are there any early repayment charges I should know about?
If you are approved for a secured loan and you intend to settle the balance as quickly as possible then it’s always a good idea to let us know beforehand so that we can find the most suitable product based on your individual needs and requirements. Most lenders have early repayment charges that are equivalent to 8 weeks of interest on the remaining balance at the time of repayment. However, the actual rates can vary considerably from one lender to the next.
What can the loan be used for?
A secured loan can be used for absolutely anything – as long as it is within the law. Home improvement, the consolidation of debt and the financing of once-in-a-lifetime holidays, weddings and other celebrations are just a few of the reasons that people apply for this type of credit. As long as you can pay the loan back and you have the required security, most lenders are completely indifferent as to why you are applying for finance.
How long can I borrow for?
Whereas most unsecured loans are only available between 1 and 5 years, secured loans have much longer repayment options available. With a secured loan, you typically have between 5 and 25 years to repay the outstanding balance, although it is important to remember that you will obviously be charged more interest for an increased loan term. However, the monthly repayments themselves will be more affordable the further you stretch them out.
If I apply, will it affect my credit score?
If you apply for multiple loans in a short period and are continually rejected then most lenders will be somewhat suspicious of your behaviour and reluctant to deal with you. However, when you apply for a secured borrowing product using our services, we only perform a soft credit check, which although recorded on your file, should not be visible to other lenders. Of course, once you are approved and decide to proceed with your secured loan, the information will be officially registered and available to anyone looking at your file.
What does Loan to Value mean?
The LTV amount, or Loan to Value, is a simple tool used by mortgage providers and other lenders to calculate the value of a loan in relation to the security you are offering. For example, if you owned a property outright and the open market value of this property was £100,000, a loan of £70,000 would be a 70% LTV product.
What is a Variable Rate loan?
A variable rate borrowing product is any mortgage or loan where the interest rate is subject to change over time – typically because it is tied to the Bank of England base rate or LIBOR rates. Unlike fixed rate products which offer reduced repayments over a set period (such as the first 2 years), variable rate mortgages and loans do not have a set cost. If the Bank of England decides to increase the base rate by a significant amount and you have a variable rate product then you could find that the cost of borrowing is no longer affordable. However, at the time of writing the Bank of England interest rate is at the lowest it has ever been, which is great news for borrowers looking to save money on finance.
What is a secured loan?
A secured loan is a long-term borrowing product that requires some type of collateral as insurance for the lender. If you are looking to borrow a substantial amount of money over an extended term then a secured loan, or homeowner loan, might be the only suitable option available. Although secured borrowing products are typically much cheaper than their unsecured counterparts (such as personal loans), the borrower does run the risk of losing their home if they find themselves unable to make monthly repayments on time. However, there are several advantages to secured credit, which include increased borrowing amounts, comfortable repayment options, better availability and lower interest rates.
What is a debt consolidation loan?
Secured loans often represent a much more affordable way of borrowing that most other types of credit. If you have a large number of unsecured debts, such as credit cards, store cards, hire purchase debts and personal loan repayments to make each month and you want to reduce your outgoings then you can use a secured loan as a means of consolidating those debts. The advantage of doing this is that the number of repayments you are expected to make each month is reduced to just one singular repayment and the cost of the debt itself is also reduced. You can also stretch the repayment period over an increased number of years, although this will obviously cost you more in the end.
How quickly can you approve my application?
At UK Property Finance, we can typically make a decision to lend in less than 20 minutes although the actual approval itself will depend on whether or not you decide to proceed with the application, alongside a number of other factors. Once you have applied for a secured loan using our services, we will provide you with a shortlist of suitable products from the whole market, which you are free to accept or reject. Once you decide to proceed, we work fast in order to ensure you receive the funds you need as quickly as possible.
So when will I actually get my loan?
Most secured loan applications take around 14 to 21 days to complete, with the funds released at the end of this time. However, UK law demands there to be an 8 day cooling off period which gives you the opportunity to change your mind once your application has been accepted and approved. Once you have been approved in principal and the cooling off period has been observed, you will then receive the relevant paperwork to sign and everything should move along swiftly.