There are two main reasons why a secured loan would be a better option;
- Firstly with the base rate due to remain the same foe the next 12 months, people on the standard variable rate's are usually far better off than what the market can offer. For example I spoke to a client yesterday who's rate was 0.5%. Her current borrowing was £139,000. This makes her current payment only £57.91 per month. This was a BTL mortgage. She was looking to raise £55,000 on top of her current mortgage taking her total borrowing to £194,000. With fees incurred a new quote for a BTL mortgage with some minor adverse would put her payment up to £833 per month interest only. I was able to get her a quote for £671 per month for £55,000 full repayment over 15yrs on a secured loan. Not only was she better off per month but the additional money would be cleared by the term end.
- In many cases we can acheive higher loan to values with secured loans. Also where client's have had mortgage arrears, CCj's, defaults or simply need to self certify their income they would probably be refused by the mortgage lenders. In a number a cases where this has happened I have successfully been able to raise the money via a secured loan.
If you feel you've fallen in to this category, don't be disheartened as there may be a solution. New mortgage a secured loan products are coming out every day. It will take time but there are more and more positive sign's that things are getting better.