subject: The Secured Loans Revival [print this page] The Secured Loans Revival The Secured Loans Revival
Since the credit crisis, which commenced in the first half of 2007 and ended at the beginning of this year,one of the most badly affected finance sectors was the secured loans one.Even although mortgages and remortgages also fell, it was not in as dramatic a fashion as secured loans which fell to less than 20% of their previous level.Secured loans are also known by the other names of homeowner loans and second mortgages, and they have these names for reasons that are very obvious.The fact that they are also known as homeowner loans is due to the fact that they are only available to homeowners as they require to be secured on the equity available on a property. The name, second mortgage, is because they are in fact exactly that, in that they rank behind the current first mortgage on a property, and are registered at the Land Registry as such.They were always a very popular method of borrowing for homeowners for a number of extremely good reasons.The first reason was that they had low rates of interest which before the recession started from about 5.9% APR which was as good as remortgage and mortgage rates, and as such many homeowners opted for a secured loan instead of a remortgage as they were quicker to arrange than a remortgage which takes on average double the time to pay out.Secured loans have a multitude of uses from home improvements to holidays, paying for a wedding, etc. etc.Homeowner loans have also traditionally been used for debt consolidation which combines all credit card debts, outstanding personal loans, etc. into one much cheaper payment each month granting enormous savings.Homeowner loans do not have a hefty penalty if paid off early, unlike a remortgage.In those pre recession days, a secured loan was a very common choice of loan for the self employed, as they did not require accounts, and simply wrote their earnings on a letter head which was known as a self cert, and was very useful for those who were unable to prove their income.During the credit crunch, the underwriting became so restricted and greatly limited the volume of homeowners who could apply.The abolition of self certs of net profit meant that very few self employed homeowners could apply for secured loans if they did not have proper accounts. until nowLink Loans re entered the market and they were the first glimmer of hope for the self employed with the introduction of self employed loans without accounts for those only trading for a minimum six months period.The equity is tight at 60% LTV, but none the less it is a step in the right direction. Link also accept applications from self employed applicants with a minimum age of twenty one, when before, the minimum age for a self employed homeowner loan applicant was twenty five which does sound rather ludicrous.Aol this gives hope for the future of homeowner loans.
