What Do The Lenders Insist On When Deciding On An Enquiry For A Secured Home Loan?
It has become more difficult to get approved for a secured loan since the credit crunch got to grips with the economy, because there are now less lenders in the market place. The intention of this article is to give people the information they need to help them get the lowest deal that they can in these lean times. It looks at at informing people that too many declined applications for loans can actually harm their credit score. As too many declined applications on their credit file will actually harm their likelihood of getting approved for the loans that they need.
Secured home loans are still available to all types of people, even those that have a less than perfect credit profile. However in order to do so they need to meet all the qualifying criteria that the lenders are working to.
Homeowner loans with a good credit history.
If you have a decent credit profile with adequate earnings and enough equity in your home then you should not have an issue qualifying for a homeowner loan at a good rate. The cheapest rates are open to people that do not want more than 65% LTV (Loan To Value). This means that the total amount of secured finance is not greater than 65% of the value of your property; this will include the amount outstanding on your mortgage and what you want to raise on the new loan. So if you have a property that is worth £100,000 with a mortgage balance of £35,000 you can take out another £30,000 and still qualify for the best rate that is currently available.
If you would like to take out more than the 65%LTV as a homeowner with a good credit record you could arrange up to 85%, but at a slightly more expensive rate. You will also need to have sufficient salary to justify the loan repayments, most loan companies will need to see that your total commitments on any current debts including your mortgage and any other credit that you are paying does not exceed more than 40% of your monthly earnings. This is why it is sensible to consolidate any outstanding credit card debts and or any high rate loans into your new secured loan to keep the debt to income ratio as low as possible. Doing this will make the lending proposition that much more acceptable to the loan companies.
There are still lenders in the market that will approve secured homeowner loans for people whose credit history is not the best, including those of us who have incurred CCJ’s (County Court Judgements) and defaults. However because approving anybody in this situation represents a higher risk to the loan companies they are likely to impose more costly rates and will reduce the amount that you can get accepted fpr dependant on the equity in your property. For example adverse credit secured loans are only acceptable up to a maximum LTV of 70%. Again apart from the equity limitations that are imposed the loan companies will still need to see proof of enough income to meet the repayments, again using the 40% of your income must cover all your debt repayments.
If you are happy that you meet the requirements detailed above and would like to apply for a secured loan, the most logical option would be to apply through a reliable secured loans broker. The reason for this is that a great many of the lenders will only accept applications through a broker, on top of that a reliable internediary will understand all the loans available from all of the lenders. As such they will be able to easily find the best lender to submit your application to. This will give you a better chance of securing the loan you need at the best rate available for your circumstances.