Secured Loans 1st, 2nd & 3rd Charges also Unsecured Loans
What are secured loans?
Secured loans, as the name suggests, are loans in which you are asked (by the lender) to provide some form of security before issuing a loan. Once you keep any property as security, it becomes the lender's property irrespective of the property's actual ownership. Be it a mortgaged property or owned outright, once pledged, the real owner surrenders his ownership until he pays the debt.
First Charge and Second Charge
First Charge – If you are pledging a property that you own, this is called the first charge secured loan.
Second charge – If you are pledging something that is already mortgaged, this would be known as the second charge.
How much can I borrow and over what term?
These sorts of loans are available, and the amount varies from person to person. The initial range starts from £1,000, and it can be anything up to £50,000. A few lenders may consider a loan up to £125,000, depending on the borrower's condition. The repayment terms are discussed at the beginning. In general, this repayment duration could be anything between three years and twenty-five years.
Please be advised that, should you pay your loan amount before the agreed time, you will have to pay a penalty. Therefore, it is highly recommended that you check the lender’s individual policy agreement, especially for this sort of clause.
Is there any variation in LTV for houses?
Yes. There is a variation in the LTV. If you are buying a home to live in, 100% LTV is available and if you want to rent the property, 85% is the maximum LTV available.
How will I be charged?
Check your agreement policy. In general, the lender does charge interest on the borrowed amount, referred to as APR. All three things- the amount you can borrow, the term available and the APR- will be based on the equity you have in the said property. Actually, any lender will check your ability to repay the loan. They will closely look at your personal circumstances, like your credit history. If your case seems strong to the lender, you can borrow up to 100% of the property value.
A general piece of advice is – please compare the APR of different loans. By comparing, you can judge which one is competitive and by how much. We at DM Financial Services have access to both the 2nd and 3rd charge lenders. Without worrying much about your credit history, give us a call if you need a loan.