About Secured Loans
If secured loans aren't a staple part of your business, the following outline may be useful for explaining the concept to your clients.
Secured Loans
- Importantly, a secured loan is usually quicker to complete than a remortgage, averaging 30 days from application to payout.
- Loans are secured on residential property or buy-to-let property and are therefore unavailable for tenants or other non-homeowners.
- Available from £5,000 up to £100,000.
- Loan Terms from 5 to 25 years.
- Available for almost any purpose – commonly including debt consolidation or home improvements.
- Suitable for the self-employed and those with an imperfect credit history, though rates will be higher for those with serious credit problems.
- No Upfront fees required.
- Loan to Value up to 100% for employed clients with excellent credit history.
Perhaps the most important recommendation for a Secured Loan is that in some cases it may allow your clients access to much lower interest rates than they would be able to find for an Unsecured product, and their chances of acceptance may be higher for a secured loan than an unsecured loan.
Consideration Period:
Secured loans up to the value of £25,000 are regulated under the Consumer Credit Act 1974 (CCA), and therefore require 2 consideration periods during the application process.
Also known as a cancellation period, the consideration gives the client the right within 7 days to reconsider a credit agreement or loan offer and refuse in writing the agreement on offer without obligation.
Initially, the client will be sent an advance copy of the loan agreement and during this period the client must not be directly contacted by the lender or broker until after the 7 days have passed. Failure to comply with these regulations will result in the loan application being void and the loan application will need to made again and new documents issued.
However if the client is happy to proceed with their application they can make contact themselves before the consideration period has finished in order to speed up the process.
At the end of the consideration period, the client will then be sent signature copies of the loan agreement and will have a further 7 days during which the person arranging the loan is not allowed to contact the client, although the client may initiate or request contact.
Qualifications: 18 or over, homeowner, resident in UK
When might a Secured Loan be the most appropriate advice for your client?
- When a quick payout is required by the client.
- When remortgaging would attract a redemption fee.
- When the clients credit rating has become adverse and a remortgage would be unavailable or prohibitively expensive.
- When it is important to the client to avoid paying an arrangement fee or other costs.
- When the client wants to raise funds beyond the maximum available under a mortgage/remortgage (secured loans available up to 100% LTV).
- When the client wishes to raise additional money to consolidate a car loan or credit card debt etc.
To extend your secured loan offering to clients, click here to register with Freedom Finance today.
