Secured loans and remortgages have many similarities starting with the fact that they are both types of home loans secured on the equity of a property, but it is the secured loan we are discussing at the moment.
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.
Before the credit crunch secured loans were available very commonly at 90% to 95%, and most secured loan lenders granted secured loans at these equity margins.
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 .
Perhaps these secured loans were too readily available when we think about it now, but although it all does seem rather reckless these self employed secured loan applicants were good business for the secured loan brokers as well as the lenders, and in general they did not default in payment.
It can be very frustrating in this current economic gloom for perfectly good clean credit worthy prospective secured loan borrowers to be unable to obtain a loan because of the very strict equity margins, and other tightening of criteria.
The secured loans industry has been struggling and brokers have been frustrated at being unable to place secured loan applications most commonly because of equity.
From the beginning of next month, ie. November 2009 the Cardiff based secured loan lender are accepting secured loan applications at 80% LTV compared to the previous maximum of 70%. This hopefully all bodes well for the secured loan product.
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.
Secured loan brokers in particular will welcome this revival.
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