Secured Loan Lender Give You A Secured Loan If Your Credit Is Bad?

Secured loans are loans that are guaranteed by an asset. Although there are commercial secured loans, secured car loans, etc. it is the homeowner secured loan that we are thinking about today.

A secured homeowner loan is secured on the equity of a primary residence, or for the lucky ones, a second or holiday home Those who only rent their home either from a private individual, a local council or a housing association cannot obtain a secured loan, and would only be eligible for an unsecured loan which is a very scarce commodity in these hard pressed times. The availability of unsecured loans is at the moment very limited even to those who do own their own homes.

A secured loan is an excellent way for a homeowner to borrow for almost any purpose whether the purpose is vehicle purchase, home improvements of all kinds such as to build a conservatory, a garage a new kitchen, etc. You can even go on a luxury holiday anywhere in the world with your secured loan funds. For those thinking about getting married you can arrange your dream wedding and pay for it with your secured loan.

The secured loan is based on equity, and what equity is is the amount left when the mortgage balance is taken away from whatever the property is worth.If someone has a mortgage of say 160,000 and the property has a value of 250,000 the equity is 90,000.

Prior to the credit crunch, loan to value secured loans were available up to 100% of the value of the property. Now this is not the case. The old favourite the 125% LTV secured loan plan is also now completely defunct.

Now the maximum equity that any secured loan lender takes into account is 70% for a self employed secured loan borrower, and 80% if the prospective secured loan applicant is employed. Therefore based on the previous example an employed person could obtain a secured loan of 40,000 maximum, while the maximum available secured loan for a self employed applicant would only be 15,000.

For homeowners wanting a secured loan but with a poor payment profile, bad credit loans still exist, but are much restricted from their position. Prior to the recession extremely adverse credit loans were available at 75% LTV.

In the past even when matters were extremely serious it was still possible to obtain a bad credit secured loan even for a homeowner staring the repossession of their property right in the face. A person can lose their home through no fault of their own but by having been made redundant or through hospitalization. Then a bad credit secured loan could have saved the day.

Even nowadays bad credit secured loans are there but at a very restricted equity margin. The equity taken into account by bad credit secured loan lenders is 60% if the adverse is not too severe and 50% in extreme cases for homeowners with months and months arrears on their mortgage, defaults, county court judgements, etc. There are now only two secured loan lenders who grant this 50% LTV secured loan plan and one of these secured loan lenders is First European Securities.

There are still two secured loan lenders in the UK such as First European Securities who grant bad credit secured loans even to those with very bad mortgage arrears, unlimited county court orders etc. However the maximum secured loan on this plan is about 25,000 and the LTV is restricted to 50%. An example of this equity for bad credit loans is that if a property is worth 200,000 , the mortgage balance would have to be under 100,000 for any secured loan whatsoever. If the mortgage is 90,000 the maximum possible secured loan available would be 10000.

Underwriting has tightened up in the secured loan market, especially when we are considering bad credit loans.However bad credit secured loans are still available.

Champion Finance has been established since 1985. They arrange secured loans for all circumstances. Whole of the market remortgages , and mortgages are also available.

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