Secured Loans Primer

In the context of this guide, when talking about secured loans and secured lending, reference is being made to that of a lender placing a legal charge over a property. A secured loan is essentially a loan that is taken out against your home or other collateral.

It is not within the financial capability of most people to purchase a property outright so most of us will therefore need to secure a mortgage. The most common type of secured loan is that of a mortgage.

Again, in the context of this guide, when talking about secured loans and secured lending, reference is being made to secondary secured loans, or second charges as they are commonly known within the industry. Borrowers who apply for a secured loan/second charge are doing so to follow that of their first mortgage.

How Do Secured Loans Work?

To the average lender, secured loans offer a very appealing prospect. They are able to lend out large sums of money with the additional security of a property - They will subsequently have open to them a number of legal remedies in the event of the borrower defaulting there obligations and payments. This will of course include home repossession.

A lender will register a secured loan by way of a legal charge with which the applicant must give consent to in order for an application to complete. The charge is then registered at the Land Registry by the lenders solicitors.

When it comes to remortgaging, most secured lenders will require the outstanding balance to be redeemed at the same time as the first mortgage. An exception to this is when a second charge lender grants a deed of postponement, thus allowing the existing second charge loan to run alongside that of the new mortgage lender.

What Are The Characteristics Of A Secured Loan?

The characteristics of a secured loan share many similarities to that of a mortgage. The most common one being that if your do not keep up the repayments on the secured loan, your home may be repossessed.

In the case of taking out a secured loan, it is a common myth that your home will be safe so long as you meet the repayments on your first mortgage. This is not true. If you fail to meet the repayments on your secured loan, even if you are up to date on your mortgage, the lender can seek possession of your property through the courts.

Secured loans can be arranged on loan sizes that usually range from 5,000 to 250,000, depending on the lender. Flexible terms are also available on secured lending, ranging from 5 up to 30 years. Some lenders will have schemes available allowing you to borrow more than the value of your property (combined with that of your first mortgage) of up to 125%. These schemes are not too common and it is believed that this is more of a marketing ploy rather than a viable or an advisable option to many borrowers.

How Does A Debt Consolidation Secured Loan Work?

A debt consolidation secured loan enables borrowers with significant levels of debt to consolidate some or all of these outstanding commitments into one loan amount and subsequently, one monthly payment. Debt consolidation is seen by many as an extremely effective short term solution to relieving the pressures of debt.

It is highly likely that by arranging a secured loan to clear off other unsecured debts such as credit cards, personal loans and hire purchases, the borrower is able to achieve a lower rate of interest than that applied to their unsecured commitments.

Not only will this take the effect of reducing the monthly payments but also secured loans can be arranged over a longer term than that of their unsecured counterparts. By extending the term of the loan will also mean that lower monthly payments can be achieved.

This is often viewed as a short term solution as in the long term, increasing the term of the debts may mean that you end up paying more interest. The other potential disadvantage of these types of loans is that consolidated debts that were once unsecured would then transform to being secured on the property.

What Are The Benefits Of A Secured Loan?

There are many benefits to be realised in taking out a secured loan. Many lenders and brokers alike will not charge any upfront fees, house valuation costs or legal fees. Compared to the fees associated with a remortgage, the secured loan option can be a very appealing one to borrowers.

Such fees associated with a remortgage will include valuation and administration fees, higher lending charges, discharge fees, title insurance and telegraphic transfer fees. This list is by no means exhaustive however they may not all be applicable in every case.

The timescales involved along with the various fees involved can be a put off for some homeowners considering a remortgage.

Perhaps the biggest appeal to most homeowners who are seeking finance is the speed at which a secured loan application can complete. At the top end of the scale, an application can take just a matter of days to complete. However for the majority, two to three weeks is a sensible timeframe to look for.

The benefits of secured loans when looked at against comparable unsecured loans are that it is highly likely that you will obtain a more favourable rate of interest on secured lending. As discussed earlier, this is due to the fact that the lender will in this case secure the loan by legal charge over the property reducing their perceived level of risk and subsequently reducing the rate of interest.

A secured loan will also offer a more flexible repayment period than that of an unsecured loan between 5 and 30 years with many lenders. If it is the intention of the borrower to obtain the very lowest monthly payment then this could be large benefit to them.

How Do I Know Whether I Should Take Out A Remortgage Or Secured Loan?

Each case must be assessed on its own merits. It is impossible to answer this question without careful consideration and assessment of the borrowers circumstances, needs and objectives.

The obvious example would be where a borrower seeking finance has a large early repayment charge to redeem their mortgage. In this case it may not be appropriate to remortgage. ERCs (Early repayment charges) can be as high as 7% of the outstanding mortgage balance which can of course result in thousands of pounds.

By arranging a secured loan in this instance might mean that you would be paying a slightly higher rate than that of the mortgage, however it could potentially save thousands of pounds of charges.

Another example of when taking out a secured loan might be of more benefit to the borrower would be a case where the first mortgage was originally taken out before the individual started to miss payments or run up another form of bad credit. It is highly likely in this instance that raising finance through a remortgage would mean paying a higher non-conforming/sub prime rate on the entire amount of borrowing.

By arranging a secured loan might mean that the borrower can still enjoy the prime high street rate applied to the first mortgage whilst only paying a higher non-conforming/sub prime rate on the new secured loan the additional finance.

Can I Apply For A Secured Loan With A Bad Credit History?

There are many schemes available today to cater for nearly every type of borrower regardless of credit history. If there is available equity in your property and you can meet the affordability criteria then it is highly like that you will be eligible for a secured loan. Bad credit will usually be defined between having one or more of the following:

# Mortgage arrears
# Rental arrears
# Secured loan arrears
# County Court Judgements
# Individual voluntary arrangements
# Bankruptcy

This again is a reflection of the higher level of risk perceived by the lender. The more severe your credit history then the higher the interest rate that you will be charged.

Car Loans Made Easy

This article will provide all the info you need to consider when buying a car on credit. But what should you be looking for if you decide to splash out on a flash new motor? Halifax released figures last year showing that 67 per cent of those taking out loans to buy cars are men, mostly around January and August when the new number plates come out.

Everyone wants a new car and increasingly people are using loans to afford them. Over 2.4 million new cars hit the UK???s road in 2007, and the figure is not expected to be much lower in the year to come.

Obviously you are going to have to get down study them eventually, but the task will be a lot easier if you have some idea of the basic options available. There are millions of different products out there, and they are all packed with mind boggling small print and thousands of additional terms and conditions. The big decision you must make is choosing the type of credit arrangement you want.

One popular option is hire purchase. With this method you hand over a deposit, and then pay off monthly installments until the car is yours. Most dealerships will let you buy a car off them this way. The interest rate on hire purchase can vary though, and you should compare the price of borrowing the money elsewhere. Some dealers will look to push you into an arrangement that will not necessarily be the best deal for you, so it is worth looking at the cost of borrowing before you head off to look at cars. The advantage of hire purchase is that the loan is secured on the car, so there is no chance of losing your house if you fail to keep up with repayments.

Personal contract purchase (PCP) is similar to hire purchase in that you put down a deposit and then pay monthly installments. With PCPs though, there is also a lump sum that must be paid at the end of the installments in order for you to own the car outright. This sum, the minimum guaranteed future value (MGFV), is often quite large, but gives you the option of buying the vehicle there and then, walking away with nothing, or switching to another PCP plan and getting a new car. PCPs usually have lower monthly repayments than hire purchase meaning you can afford a better car. They do work out more expensive in the long run though.

Both of these options are available only from dealers, and it can often be cheaper to take out a personal loan. Taking out a loan has the added advantage that you own the car outright from the moment you start making payments. If the loan is secured on your house then there is always the risk of finding yourself homeless though. It is generally cheaper to borrow money from a bank than a dealer, especially if you shop around. But banks are becoming increasingly fussy about who they hand out thousands of pounds to, and it make take some searching to find a cheaper deal that will accept you with a blemished credit history.

If driving a brand new car is personal The payments are often cheaper than with PCPs or hire purchase, and you always have the option of getting a new car at the end of every deal. There are big advantages to this though. The big problem with this scheme is that you never actually own a car, and just rent one off the dealer instead. The payments are often cheaper than with PCPs or hire purchase, and you always have the option of getting a new car is personal contract hire (PCH).

There are big advantages to this though. The big problem with this scheme is that you never actually own a car, and just rent one off the dealer instead. If driving a brand new car is personal contract hire (PCH). The payments are often cheaper than with PCPs or hire purchase, and you always have the option of getting a new car at the end of every deal.

There are big advantages to this though. The big problem with this scheme is that you never actually own a car, and just rent one off the dealer instead. The last way of getting yourself a new car is personal contract hire (PCH).

So do your research, get some comfy shoes on, and good luck. At the end of the day the more legwork you do, the more likely you are to find a great deal. Don???t get drawn in by flashy introductory offers which cost a fortune in the long run.

Price comparison websites are a great way to compare lots of palns at once, and after consulting them and your dealer, you should be able to find the deal that is cheaper for you. Once you have worked out which of these plans you think will suit you the best, the only thing to do is to shop around.

Credit Cards - The Basics

And How They?ll Make a Tidy Fortune from the Unknowing How Lenders Operate ?

These financial institutions operate on simple principles and exploit the fact that consumer demand and their customer?s naivety will keep business turning endlessly over. Nothing, however, could be further from the truth. they are taking from you every month. and profits ?

Credit card companies might seem like immensely clever, money making enterprises that exploit every loophole to maximize the interest payments ?

It doesn?t have to be that way, however. Know what to look out for and you can cut your overheads and stop these businesses from making a dime more than they have to.

Lenders exploit the fact that people use one card for many purchases. For example, if you use a balance transfer special card rate for spending in the supermarket or mall, they deliberately structure repayments in such a way that you?ll pay a fortune on the entire balance. To properly play your plastic you need to deploy an army of cards as weapons in the war against consumer debt. Using the right tool for the right job will smash your credit card costs.

If you already have hefty credit card bills, transferring the balance will usually substantially cut your interest costs. What this means is that your new provider pays off the debts on your current credit or store cards for you.

You then owe the money at a (hopefully) lower interest rate for a fixed ? or sometimes indefinite ? period of time. The key to making this work is by not using this card for spending. What this can mean is that credit card providers will then revert the interest rate for the WHOLE of the balance up to a higher rate.

Consumers who spend on a card, but don?t clear the debt each month should focus on minimizing the interest cost. Search the market for the lowest purchase rate available, but also keep in mind the day when you?ll clear the balance in full (e.g. Bonus time; when your bonds mature, etc.) and don?t let the balance spiral beyond your means.

If you pay off your balance in full each month then the interest rate is irrelevant. Focus instead on the gains available from using the card for spending. The key to this is the reward scheme offered. Many credit cards offer points schemes or even cash-back. There?s a huge array of different schemes, but by picking the right one you can benefit substantially. It?s often simpler just to go for a Cashback card, where the benefits are more apparent, but sometimes reward schemes offer great inducements ? particularly when they offer double points to new customers, and so on.

If you?re one of those lucky people to be debt free you can take REVENGE on the credit card companies and make free dollars from their products. The schemes are simple to manipulate. If they lend you money at 0%, you can bank the cash and earn interest on it. There are a variety of mechanisms that allow you to get money into your savings account quickly and easily. Once its in, just let it sit there for the duration of the interest free period and pay it back in full when it?s at an end. Substantial amounts can be made from this, but it?s a strategy that should only ever be used by consumers with a good credit history, no debts and are prepared to make a little effort.

Stick to a credit card that charges low interest on purchases and you?ll be fine. As a rule, however, avoid these expensive options like a plague. make sure you take them up on it when buying something big, thus maximizing your saving.

If they do so ? For instance, some offer a 10 per cent discount on first purchases. You should never use them to borrow money on, and if they offer any perks and benefits make sure they work for you. They charge the highest rates of interest, and by being offered at a department store counter are an easy lure into a mine of consumer debt. Store cards should be avoided under almost all circumstances.

In a position of strength, you can then make credit cards work for you. Beyond that, there are a variety of simple strategies you can apply that will boost your credit score and help enable you to get the best credit cards for your needs. Apply to a credit reference company, like Experian, and check that there are no erroneous black marks on your record.

Sometimes there are quite valid reasons for this, but on other occasions it can be due to incorrect information held on your credit reference file. Some people, however, simply can?t get new credit cards.

You Count On Your Bank, But The Bank Count On You Even More

Some people might wonder why the banks would not have enough money to pay every depositor out. We are well aware, that banks rely on the fact that not all their depositors will wish to withdraw their cash at the same time, because if they did, the banks would not have the cash available to meet all the demand.

They make money with your money, and they pay you a bit as well, so you are happy. Providing there is no situation where everybody wants their money out at once, the banks have nothing to worry about on that score. But if you did want to take it out, there is cash from other depositors which can be used to deal with it.

The chances are you will leave the cash in the bank without taking it out, or taking out only a part of it. They will credit your account with the sum you deposited with them, but the actual cash will have gone to earn more interest than you will get. When a client places cash into his or hers account, the bank will invest it for themselves.

This all works very well unless there is a time when people fail to meet their obligations, and do not keep up the payments on their loans. Banks expect the odd case here and there, when someone cannot pay because of a bad investment or sudden personal difficulties. When there is a situation due to certain economic problems which can cause trouble to thousands of people to meet regular promised repayments, the matter is serious because cash must keep coming for the banks to keep the show on the road. Without that expected cash, the machine can stop. Liquidity is the vital.

To understand it better, imagine that you need money and you get cash advances from a credit card which we will call A. When you reach the credit limit you will have to make a minimum payment which you have not available, so you decide to get cash from another credit card B, and when that is due to be repaid, you use credit card C and so on. There comes a time of course, when you run out of credit cards and you have to make repayments from somewhere. Unless you sell the car or an item of some value or obtain a loan from some good fairy, you are going to go under.

The banks have an easier task, inasmuch that they can turn to the central bank to borrow money to get them over their liquidity problem. Nobody wants to allow a run on a bank, since it can trigger off other stampedes. It is a bad idea to cause people to lose faith in the banking system as a whole. In other words, it is not prudent to allow banks to go to the wall, and help will invariably be found, unless there is absolutely no other way.

We are now reaching the point when shortage of money available to the banks spells out shortage of money available for them to lend out.

As a consequence for instance, the housing market gets slowed down. When the house prices suffer, it is largely because the borrowers cannot get the money to make a purchase and not because they do not wish to buy. And even if the prices go down further, they will still not buy, simply because they will still find it hard to get a mortgage in the present climate.

As usual, at the end of the day, people who have cash money will be able to snap up some real bargains and wait until conditions change and make their profit. The bargains will be available in America as well as here and in other parts of the world.

While banks make money from your money, they earn a little for you as well. They also provide a number of services without which, life would be hard. However, you must not belittle your role in all this, meaning that although you need them, they certainly need you!

Things were going right for a large number of people with ready cash at their disposal to step in soon.

Yes, cash is King. Based on realistic prices, a lot of the properties will be sold in the main to cash buyers able to get their foreign currency from the foreign currency exchange companies at very good rates, especially if they phone around for the best deal. These lucky people, will find terrific deals waiting in the offices of friendly and good realtors in USA, in the UK, on the Continent, as well as in other parts of the world.

Are You Considering Buying A Repossessed Home? You Might Want To Know How That Home Comes On The Market In The First Place

There can be many reasons that lead to house repossession, such as: divorce, credit card debt, illness, secured or unsecured debts or separation. Statistically, the figures for home repossession have risen by 45%, according to Government figures.

If the borrower does not contact them, or cannot afford to make the payments and a second payment is missed, then the lender can begin the process of home repossession. The first missed payment brings the borrower into arrears with the lender, who then have to be contacted and a payment schedule agreed. The process of repossession can legally begin when 2 payments to a lender have been missed.

The first stage of this is for the lender to state in a letter that the borrower has seven days in which to meet the payments or to agree a payment scheme. If this is not possible, then solicitors will begin court proceedings, seeking a home repossession order.

Usually the court will try and see house repossession as the last eventuality. However, if the borrower is deemed to be unable to make the necessary repayments, including arrears and penalties, then he will be served with an eviction notice and a date will be scheduled to leave the house.

The repossessed home is now the legal property of the mortgage lender. The lender can then instruct an estate agent to put the house on the property market or for it to be sold at auction.

First-time house-buyers can research these properties and they can become an affordable alternative in an increasingly expensive market.

Offers can be made on a repossessed house, but the lender may decide they want to publish a ?notice of offer? in the local press. This states that the lender will accept higher offers that are received by a certain date.

Auctions used to be mainly used by investors looking to by the property and sell it on at a profit, but now those wanting to get onto the ?property ladder? ? but may not have the necessary funds for a standard purchase ? can do so, as the properties are usually sold for less than their market value.

Other benefits include the bidding process, which is in an open forum so all bidders know the price and do not have to bid ?over the odds? to secure the sale. Also, the process is much quicker than the conventional sale process, usually taking 1 month from sale to occupation.

There are other factors involved, however. A repossessed home may be in need of repair and renovation or carry a negative credit rating associated with the address ? although this can be absolved by contacting the relevant credit reference agencies.

There are lists of auctioneers available in local directories, but it is also worth contacting estate agents and mortgage lenders who have a vested interest in the sale of any repossessed property, although mortgage lenders can be secretive about their involvement in house repossession, in terms of image-consciousness.

The Internet offers many services that can supply lists of repossessed properties, but these are likely to generate a lot of interest, due to the potential to buy a house at less than market value.