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UK PROPERTY NEWS & ADVICE


Debt Consolidation With A Secured Loan

Savvy borrowers know that there can be advantages in choosing a secured loan to consolidate existing debt into a single monthly repayment. This really depends on how the interest is worked out which can vary from lender to lender.

The recent explosion in property prices has allowed many a home owner with considerable equity which is locked up in their property. By releasing some of this equity by re-mortgaging or taking at a secured loan, it is feasible that the home owner can save considerable sum on their existing debt repayments.

The APR that bank will choose to lend to each individual at is a function of how risky an investment they are deemed to be. The inherent or baseline level of risk associated with each person has recently risen to the current credit crunch, so the cheap loans of yesterday will become fewer and farther between.

However, it will still be possible to earn a good rate if you are deemed to be a less risky investment by the bank. This is decided by how good your credit rating is and whether you have defaulted on any payment over the last 6 years. Secured loans are typically taken out over longer periods that unsecured loans and have lower interest rates. However, they are secured on the home and application process can take several weeks as the loan company will need to liaise with your mortgage company in order to ensure that everything is in order.

While it is possible that due to the length of the loans, you can end up paying back as much as you would do with an unsecured loans, these repayments can be more manageable to the longer loan term.

The tables below show a summary of typical rates for some lenders (all rates accurate at time of writing):

Lender

Loan Type

Typical Rate

ASDA Finance

Secured Loans

Typical 7.6%

Alliance & Leicester

Secured Loans

Typical 7.9%

Norton

Secured Loans

Typical 9.9%

Nemo

Secured Loans

Typical 10.3%


Lender

Loan Type

Typical Rate

ASDA Finance

Unsecured Loans

Typical 6.9%

Natwest

Unsecured Loans

Typical 6.9%

RBS

Unsecured Loans

Typical 6.9%

Alliance & Leicester

Unsecured Loans

Typical 6.5%

Moneyback Bank

Unsecured Loans

Typical 6.3%



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