SECURED LOANS

As the name suggests, secured loans are loans that are secured against your home. Because of this the lenders are more likely to approve your loan, no matter what your credit history. This quite often offers a better option than personal loans from a bank or other unsecured lender...

Secured loans may be used for any purpose like home improvement projects, such as conservatories and extensions, or debt consolidation, the purchase of a new car or boat, paying for a daughters wedding, or a luxury holiday such as a cruise, or even setting up a new business venture. 

Unlike a personal loan which is unsecured, the amounts of money that can be borrowed for the secured option vary between £1,000 and up to £75,000. Unlike some personal loans the repayment period can be spread over a longer time period which can vary typically between five and twenty five years, therefore reducing the monthly amount payable. This is especially helpful to those homeowners who are seeking an affordable loan for consolidation of their debts.

Homeowners who have suffered with a bad credit history, CCJ’s, arrears, defaults, or bad credit ratings are more likely to have successful applications with companies who specialise in bad credit secured loans than unsecured applications, because the property or asset is guaranteeing the loan and therefore this is deemed an acceptable risk as far as the lender is concerned. 

Taking out a secured loan may be a serious alternative to re-mortgaging for homeowners as upfront arrangement fees may not apply. It is also worth noting that this depends on the individual lenders terms and conditions when applying.

BRIDGING FINANCE

A bridging loan or bridge loan is a short term loan given to ‘bridge the gap’ between you buying a new house and selling your previous house. Bridging loans can also be used as a short term loan to help you buy a property at auction, where you’ll need the money immediately but may not have sold your current property yet.

A bridging loan (or bridge loan) can be useful if you need to borrow money for a short-period. The most common use of these loans is to help fund a new house purchase while you’re waiting for your existing property to sell.

Bridging loans can also be used to help you buy at auction – where you’ll need to put down a deposit as soon as the hammer comes down.

How does a bridging loan work?

There are two types of bridging loan, closed and open. With a closed loan there is a fixed repayment date – you will normally be given this kind of loan if you have exchanged contracts but are waiting for a property sale to complete. With an open loan there is no fixed repayment date, but you will normally be expected to pay it off within one year.

Whichever kind of loan you take out, the lender will want to see evidence of a clear repayment strategy; such as using equity from a property sale or taking out a mortgage.

They will also want to see evidence of the new property you are purchasing and the price you plan to pay for it – as well as proof of what you are doing to sell your current property if relevant. You should also have a back-up plan in place for if your repayment strategy fails – for example, if a planned sale falls through.

Bridging loans are quite expensive. Typically, there’s a set-up fee so it is advisable to only take one out if you are confident that you won’t need it for a long period of time.

Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it.

Depending on your circumstances a fee between 0 - 3% of the loan amount may be payable.

Hale Mortgages is a trading name of HMB Finance Group Limited which is authorised and regulated by the Financial Conduct Authority.

Our FCA number is 752970. The FCA does not regulate most Buy to Let, Commercial Mortgages & Bridging Loans. 

Registered in England & Wales No. 9959617. Registered Office: 193a Ashley Road, Hale, Altrincham, Cheshire. WA15 9SQ.

© HMB Finance Group Limited 2020