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% |
Back
to Property News & Advice
|