Preferred Real Estate

It has been discovered that the interest rates for unsecured loans are higher than at almost any time in the past and at their highest rate for the past nine years which all seems rather strange when the Bank of England Base lending Rate still holds at the lowest rate ever at 0.05%

Nine years ago the Base Lending Rate was more than 5% higher than the 0.05% rate of now.

Unsecured loans are therefore at their highest rate in spite of the low base rate now compared to the first few years of this decade.

As well as the interest rates being high, it is also more difficult now than in the past to obtain an unsecured loan although it is a fact that unsecured loans were always only available to individuals with good credit ratings.

As unsecured loan are as is obviously unsecured without any security the lender always for example requires proof as to the purpose of the loan, and if the loan is needed for fitting a new bathroom several estimates are required.

There are all sorts of loans both unsecured and secured , but if you are a homeowner it is wise to use your status as such to borrow at great interest rates by means of the home loan products of remortgages and secured loans.

These two loans are of course only available to homeowners as they are both secured on property, and they are both excellent methods by which homeowners can raise finance which can be used for many purposes.

There are various matters to consider as to which is the better product at any particular time to be considered.

Homeowners are tied into a mortgage for several years after the start date of the mortgage and during these years they are required to pay an early repayment penalty if they pay off the mortgage early and this can amount to thousands of pounds.

This can cost the homeowner thousands of pounds in charges as the penalty can be from 2% to 5% of the outstanding mortgage balance. If you have a mortgage of say 300,000, the penalty would be from 6,000 to as much as 15,000. Therefore to remortgage in such circumstances would be an act of madness, and a secured loan would be the road to take.

The process of transferring ones mortgage to a different lender is called a remortgage. Remortgaging happens for many reasons such as another lender offering a cheaper rate, the need for additional cash flow or because of debt consolidation.

Remortage is a term that is commonly misused, the process of a remortgage is the full payment of legal costs upon a house a new set of costs applied through a different lender. Many homeowners use this term when they are changing between products with the same lender.

As previously stated the main reason for a changing ones mortgage is because a different lender can offer the same mortgage at a rate that has lower interest meaning more money for you. A saving of 80 a month could be achieved with a 1% decrease in the interest rate of a 100,000 mortgage. As a one-off activity this is by far the easiest way to reduce your money outgoings and save money.

Unfortunately the current economic climate is not geared towards mortgage lenders, the credit crunch has meant that lenders are less likely to try to offer competitive rates, in all honesty they are not that keen to get new mortgage business. Do not let this deter you though due to the low base rates mortgages can be gained with a great decrease in interest, you will just need to hunt around.

For the previous decade until 2007 the start of the recession, there was a great availability of all sorts of loans, and loan lenders were vying for your trade.

There was even a good availability of loans for tenants that is for those who do not actually own their own home but rent it from a housing association, a local council or a private individual.

The problem with Provident is that the maximum loan has always been small. At present the maximum loan available for a first time borrower is 100, hardly a sum that would buy much nowadays.

Welcome Finance used to advance both secured and unsecured loans to both tenants and homeowners, and although their interest rates were high, it was a useful product which did allow tenants to borrow the money they needed. Unfortunately after many years of profitable trading, Welcome closed their doors, and this left tenants out on a limb with very little options of obtaining a loan.This is a most unfortunate situation., and one that could not be fore seen.

The world of secured home loans in general can be confusing to the layman.

Certain individuals are not really certain what these different financial home loan products are in fact.They are unsure of what is a mortgage, a remortgage and a secured loan.

Let us start with mortgages. A mortgage is a home loan used to purchase a property. This can be a first house purchase whereby someone requires a mortgage to become a homeowner for the first time, having up to that point stayed in rented property or for younger people having lived with parents.

Most people need to take out a mortgage they are well off and have enough money saved to pay for the property, and most people are not in this fortunate position.

A mortgage can be obtained from a bank or a building society, and the prospective mortgage borrower will be required to go into a branch for an interview, and to produce certain documentation.

The information you are required to produce is wage information, bank statements, proof of identity which means a passport or a driving licence, proof of residency which is such things as utility bills etc. and these require to be dated within the last two months. Most mortgage lenders also require sight of three months bank statements to check on your financial out goings.

Almost everyone in not only in the UK but throughout the civilized world except perhaps the most affluent people in society at some time or the other require a loan.

Even people who are relatively comfortable and have money in the bank often feel safer keeping it in their account in case of anything going wrong in the future when the savings will be required, and subsequently they often prefer to take out a loan than to pay cash.

If we were God and could see the course of the life that lies ahead we may feel different but we are only fallible human beings who can quite suddenly suffer from an illness making it impossible for us to work.

Also no one with hand on heart can be 100% sure of their employment security, and as has been witnessed during this credit crunch redundancy can happen when we least expect it.

What loans are is money that we apply for to a loan lender and which he advances to us with interest placed on top of what we owe which forms the profit of the loan lender.

Loans are essential to the lives of a vast majority of people.

Loans UK are obviously only available in the UK.

There are many different formats of loans UK such as business loans UK which can fund the purchase of a new business or be used to improve the profitability of an existing business.

Most people regard loans UK obtained to purchase such goods as cars to be unsecured loans when in fact the car itself is the security offered in this instance.

Loans UK taken out for yachts, caravans, etc. are forms of secured loans UK, although most people do not realize this at the time of purchase.

Bearing in mind that these vehicle loans are secured loans UK, it is wise to work out that the repayments are well affordable to you as you can lose the car, van, etc. by it being repossessed if you default on payment.

When considering business or commercial loans UK it must be remembered that these are a form of secured loan UK, and the security is the bricks and mortar value and not how much profits made by that particular firm.

It is only homeowners who are eligible to apply for homeowner loans A.K.A. secured loans.

Tenants are not eligible as these homeowner loans must be secured by the equity on a property. Equity is the difference between the mortgage balance and the value of the property. To give an example if a property is worth 230,000 and the mortgage balance is 120,000 the available equity would be 110,000.

Secured loans used to be available at high loan to values up to 100% , and there were also 90% and 95% LTV plans.Secured loans of up to 100,000 were available. In addition income and credit rating were taken into aaccount.

Some homeowner loan lenders even advanced secured loans at 125% LTV, meaning that secured loans were available at up to 25% more than the value of the property. However most lenders limited the maximum loan on this plan to a maximum of 60,000.

There are no longer such slack loan to values, and the maximum is 80% for employed prospective secured homeowner loan applicants, and reduced to 70% for self employed people.