Although remortgages and secured loans have a great deal in common, as they are both are in fact secured homeowner loans which are based on whatever equity is available on a property.
What is meant by equity is really the gap between the balance of a mortgage and the value of the property on which the mortgage is secured.This means that the equity on a property would be 100,000, if the value of the property is 230,000 and the mortgage secured on the property is 130,000.
In the good old days before the recession, and how far away it all seems now, secured loans were available with all secured lenders at easily up to 95% LTV, ie. loan to value, and this applied to all secured loan lenders from Sterling, FNB. G.E., Future Mortgages, and so on and so forth, and this applied throughout the UK.
Self employed applicants were even allowed secured loans of up to 100% of the property value, and simply declared their own net profit as so called proof of income. Loans on this plan were available from 5,000 to a maximum of 75,000. This was a fairly large value secured loan .
Secured loans were granted as if they were going out of fashion, and although sometimes the underwriting criteria was perhaps a little slack at times, these secured loans were a great useful product enabling secured loan applicants, both employed and employed to obtain a loan to use for a number of purposes.
It can be very frustrating in this current economic gloom for perfectly good clean creditworthy prospective secured loan borrowers to be unable to obtain a loan because of the very strict equity margins, and other tightening of criteria.
It is equally frustrating for the many decent reputable secured loan brokers to be so frequently unable to obtain a secured loan for a customer which in the past would have been an application welcomed by the secured loan lenders as the main stay of their business.
For the past two years or so equity has been king as it were, although status also counts.
The most important feature for obtaining a secured loan has been the equity in the property, although a credit rating is also taken into consideration.
Let us hope that 2010 will be the best year for secured loans for some time.
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