FAQs about the types of loans
- What is a secured loan?
- What is a Personal Loan?
- How long with my application take?
- Are there any up front costs?
What is a Secured Loan?
A secured loan means that you have agreed to provide security for the lender so that if you default on the loan (not make your agreed payments) they will use that security to pay off the debt.
The security is usually, although not always, your house.
It's quite common, if you go to a financial institution such as a bank, to be asked for security. This takes the risk out of lending you money, because of the certainty they can get all they lend to you back, if for some reason you stop paying the monthly repayments.
It makes little difference whether you own your house or still have a mortgage on it as the bank will simply assess the value of the equity on the property. They do this by deducting any outstanding loans, such as your existing mortgage, from the market value. So, assuming your house is worth more than any outstanding monies owed, and that it is in good condition, it will be acceptable as security for a loan.
What is a Personal Loan?
Personal loans are an effective way for many consumers in the UK to raise finance and then make monthly repayments to pay off the amount borrowed.
Unsecured personal loans are available from a number of lenders in the UK: from High Street banks and building societies, to specialist online lenders. These loans are available to both homeowners and tenants, as they are unsecured and therefore no collateral is required by the lender. However, most lenders will only offer unsecured personal loans to those with decent credit. Those with a bad credit rating will usually have to turn to a secured loan.
If you have a good credit history and rating you will be able to enjoy a good choice of personal loans from a variety of lenders. This means that you should find a loan that suits you in terms of repayments, interest rates, and terms and conditions. You can use personal loans for a wide range of purposes, such as purchasing a new car, paying for a luxury holiday, consolidating smaller higher-interest debts, and just about anything else.
The amount that you can borrow with unsecured personal loans can vary, and most lenders offer up to around £25,000. However, the decision on how much applicants will be eligible to borrow will be based on a number of factors such as employment status, income, outgoings, credit history and rating, etc.
How long will my application take?
Unsecured Loans
An unsecured loan will typically take 5 -7 days to complete. (But we can speed this process up when applying, ask about the courier service).
Secured Loans
A secured loan will typically 21 days to complete. You can speed up the process up by sending back your application pack as soon as possible.
Are there any up front costs?
Unsecured Loans
Unsecured loans have no costs involved at all, these are completely free to arrange.
If you require the loan fast and require the documents to be couriered to your home the lender will charge you a one off £50 fee, this will be paid before the first monthly instalment *This service is not available from all lenders.
Secured Loans
Secured loans have no up front costs as all associated costs are added to the amount you will borrow. The set-up fee that is added to the loan is to cover the references that are required to process the application such as valuation, and mortgage references. The fee will range from application to application and can be from 1 – 12.5%. The cost will be shown on your documents under 'arrangement' or 'broker' fee.
