| Basically
loans fall into two general categories, and what these categories
are unsecured loans and secured loans.
As the
name unsecured clearly states unsecured loans require no security
of any kind, and this is what makes them available to both
tenants and homeowners.
It has
always been difficult for tenants to get a loan of any kind
as they cannot offer any security.
Secured
names are again, as their name suggests, a form of loan that
must have some sort of concrete guarantee, and in the case
of personal secured loans the security necessary is the homeowner's
property.
A secured
loan is also a much rarer commodity now than it was pre credit
crunch.
The secured
loan sector is 80% or more down on the figures at the end
of 2006 and beginning of 2007.
This is
mainly due to the fact that the underwriting criteria of secured
loan lenders has tightened to such an extent that many who
were eligible for a secured loan in the past no longer are.
Secured
loan lenders have gone out of business one after the other
and similarly have finance brokers.
There
are fewer secured loan lenders in the market now, and secured
loans have been around for over quarter of a century.
If a person
is a homeowner and is in full time employment, secured loans
are a good low interest way to raise funds.
A secured
loan requires to be secured against the value of a house or
a flat.
Equity
is the figure that remains when the mortgage balance is deducted
from the property vale.
If a property
is valued at £240,000 and the outstanding mortgage balance
stands at £150,000 the available equity is £70,000.
However,
as 100% and plus equity plans have long gone, this does not
mean that that particular homeowner can borrow £70,000,
as he could have done prior to the economy crumbling in the
UK.
The maximum
loan that an employed applicant can borrow stands at 80% maximum,
and therefore based on the previous figures the most that
an employed applicant could borrow would be £42,000.
Self employed
can only borrow up to a maximum of 70%, making the maximum
borrowing available on this occasion £18,000.
Self declarations
of income for the self employed have now virtually disappeared
and often a lender will ask for an accountant's certificate
to provide additional income proof.
The FSA
has regulated the insurance and mortgage sectors for some
years now and there is talk that their regulation of secured
loans is on the cards.
There
are still two secured loan lenders who do not yet require
accounts or even an accountant's back up letter for homeowners
wanting to borrow before they are as extinct as the dinosaur.
There
is no time for delay for self employed applicants requiring
a secured loan soon.
|
