Secured Loans And The Recession 

To start with mortgages, which are the home loans needed when a person wants to purchase a property, and a mortgage is required whether we are talking about a first time buyer or someone who is already a homeowner who wants to move to a larger and better property.

During the almost three years of the recession the demand for mortgages decreased and this was to a large extent caused by the lack of confidence that permeated through society.

Many were unsure of their job security and as such they were un prepared to take on a large financial responsibilty.

Newly built private estates throughout the country stood with the majority of houses unsold and builders often reduced their price of these houses or offered incentives in the shape of supplying land scaping, furniture, including white goods, and all floor coverings free of charge and included in the price of the property.

Now with some confidence restored, many more will be encouraged to buy a property and they will require a mortgage to do so, and therefore mortgage approvals are set to increase.

Remortgages also fell, partly again due to lack of confidence, and partly due to the fall in house prices meaning that not as many homeowners as previously would be eligible for the really low interest rates available when moving their current mortgage to another lender which is of course what a remortgaqe is.

The best rates of interest for a remortgage start at present from only 1.84% but this low rate applies only to homeowners who have a minimum 40% deposit.

Now that property prices are all set to rise remortgages should also rise accordingly.

The home loan that was more adversely affected than other during the recession was the secured loan which is otherwise called a homeowner loan.

Secured loans or homeowner loans were a very popular way for homeowners to borrow until the beginning of 2007, and were in fact possibly THE home loan of choice due to their low interest rates and flexibility.

Homeowner loans are flexible firstly due to the fact that they can be used for almost any legitimate purpose from car purchase to paying fo a weding or a special holiday through to paying for home improvements of for buying a little bolt hole in the sun.

Before the recession, there were 125% equity plans which meant that a homeowner could borrow up to 25% more than the value of the property.

The recession put paid to this plan due to the fall in property prices and caused First Plus, who specialized in these homeowner loans, to cease trading.

Loan to value became restricted to 70% for employed applicants and 60% or there bouts for the self employed who no longer had the option of self certifying their net prfit but now had to produce accounts.

This LTV has now slackened slightly to 80% for employed secured loan applicants with a couple of lenders.

First Plus was not the only casualty of the recession as many other homeowner loan lenders followed them by closing their doors never to open them again.

Secured homeowner loan brokers went out of business in their hundreds if not thousands, all forced out by the fact that homeowner loans decreased by more than 80% since the start of 2007.

With house prices rising, it is to be hoped tht an upsurge of applications and approvals for remortgages, mortgages and secured loans will folllow accordingly, and the increased feeling of renewed confidence due to the end of the recession can only help towards this.