The most common type of secured loan is that of a mortgage. It is not within the financial capability of most people to purchase a property outright so most of us will therefore need to secure a mortgage.

Again, in the context of this guide, when talking about secured loans and secured lending, reference is being made to secondary secured loans, or second charges as they are commonly known within the industry. Borrowers who apply for a secured loan/second charge are doing so to follow that of their first mortgage.

How Do Secured Loans Work?

To the average lender, secured loans offer a very appealing prospect. They are able to lend out large sums of money with the additional security of a property – They will subsequently have open to them a number of legal remedies in the event of the borrower defaulting there obligations and payments. This will of course include home repossession.

A lender will register a secured loan by way of a legal charge with which the applicant must give consent to in order for an application to complete. The charge is then registered at the Land Registry by the lenders solicitors.

When it comes to remortgaging, most secured lenders will require the outstanding balance to be redeemed at the same time as the first mortgage. An exception to this is when a second charge lender grants a deed of postponement, thus allowing the existing second charge loan to run alongside that of the new mortgage lender.

What Are The Characteristics Of A Secured Loan?

The characteristics of a secured loan share many similarities to that of a mortgage. The most common one being that if your do not keep up the repayments on the secured loan, your home may be repossessed.

In the case of taking out a secured loan, it is a common myth that your home will be safe so long as you meet the repayments on your first mortgage. This is not true. If you fail to meet the repayments on your secured loan, even if you are up to date on your mortgage, the lender can seek possession of your property through the courts.

Secured loans can be arranged on loan sizes that usually range from 5,000 to 250,000, depending on the lender. Flexible terms are also available on secured lending, ranging from 5 up to 30 years. Some lenders will have schemes available allowing you to borrow more than the value of your property (combined with that of your first mortgage) of up to 125%. These schemes are not too common and it is believed that this is more of a marketing ploy rather than a viable or an advisable option to many borrowers.

How Does A Debt Consolidation Secured Loan Work?

A debt consolidation secured loan enables borrowers with significant levels of debt to consolidate some or all of these outstanding commitments into one loan amount and subsequently, one monthly payment. Debt consolidation is seen by many as an extremely effective short term solution to relieving the pressures of debt.

It is highly likely that by arranging a secured loan to clear off other unsecured debts such as credit cards, personal loans and hire purchases, the borrower is able to achieve a lower rate of interest than that applied to their unsecured commitments.

Not only will this take the effect of reducing the monthly payments but also secured loans can be arranged over a longer term than that of their unsecured counterparts. By extending the term of the loan will also mean that lower monthly payments can be achieved.

This is often viewed as a short term solution as in the long term, increasing the term of the debts may mean that you end up paying more interest. The other potential disadvantage of these types of loans is that consolidated debts that were once unsecured would then transform to being secured on the property.

What Are The Benefits Of A Secured Loan?

There are many benefits to be realised in taking out a secured loan. Many lenders and brokers alike will not charge any upfront fees, house valuation costs or legal fees. Compared to the fees associated with a remortgage, the secured loan option can be a very appealing one to borrowers.

Such fees associated with a remortgage will include valuation and administration fees, higher lending charges, discharge fees, title insurance and telegraphic transfer fees. This list is by no means exhaustive however they may not all be applicable in every case.

The timescales involved along with the various fees involved can be a put off for some homeowners considering a remortgage.

Perhaps the biggest appeal to most homeowners who are seeking finance is the speed at which a secured loan application can complete. At the top end of the scale, an application can take just a matter of days to complete. However for the majority, two to three weeks is a sensible timeframe to look for.

The benefits of secured loans when looked at against comparable unsecured loans are that it is highly likely that you will obtain a more favourable rate of interest on secured lending. As discussed earlier, this is due to the fact that the lender will in this case secure the loan by legal charge over the property reducing their perceived level of risk and subsequently reducing the rate of interest.

A secured loan will also offer a more flexible repayment period than that of an unsecured loan between 5 and 30 years with many lenders. If it is the intention of the borrower to obtain the very lowest monthly payment then this could be large benefit to them.

How Do I Know Whether I Should Take Out A Remortgage Or Secured Loan?

Each case must be assessed on its own merits. It is impossible to answer this question without careful consideration and assessment of the borrowers circumstances, needs and objectives.

The obvious example would be where a borrower seeking finance has a large early repayment charge to redeem their mortgage. In this case it may not be appropriate to remortgage. ERCs (Early repayment charges) can be as high as 7% of the outstanding mortgage balance which can of course result in thousands of pounds.

By arranging a secured loan in this instance might mean that you would be paying a slightly higher rate than that of the mortgage, however it could potentially save thousands of pounds of charges.

Another example of when taking out a secured loan might be of more benefit to the borrower would be a case where the first mortgage was originally taken out before the individual started to miss payments or run up another form of bad credit. It is highly likely in this instance that raising finance through a remortgage would mean paying a higher non-conforming/sub prime rate on the entire amount of borrowing.

By arranging a secured loan might mean that the borrower can still enjoy the prime high street rate applied to the first mortgage whilst only paying a higher non-conforming/sub prime rate on the new secured loan the additional finance.

Can I Apply For A Secured Loan With A Bad Credit History?

There are many schemes available today to cater for nearly every type of borrower regardless of credit history. If there is available equity in your property and you can meet the affordability criteria then it is highly like that you will be eligible for a secured loan. Bad credit will usually be defined between having one or more of the following:

# Mortgage arrears
# Rental arrears
# Secured loan arrears
# County Court Judgements
# Individual voluntary arrangements
# Bankruptcy

The more severe your credit history then the higher the interest rate that you will be charged. This again is a reflection of the higher level of risk perceived by the lender.

The solution proved to be effective as many people began to recover their businesses and income started to flow. Low-income families who could not afford to pay for their mortgage were saved from being kicked out with the government’s mortgage assistance program. The debt consolidation program was also obtained by many middle income citizens who are neck-deep in credit card debt. The package has not only saved them from litigation but has also liberated them out of sleepless nights. For many, it is like being freed from chains of debt repayment and walking away in high spirits.

The nearest public library or any government office can be approached anytime during office hours to get more information about the debt relief grant. There is absolutely no need for stringent paper requirement. All you need to present is something that will certify you as 18 years old and above and an American citizen. While processing may take some days or weeks, it will be all worth the wait when you finally take hold of your check. The amount may range, depending on how much you need, but the grant may reach up to $10,000. This is all given for free by the government, no repayments, and no collateral.

Who is eligible for this program?

The provisions of the SSRA apply to active duty military personnel who had a mortgage obligation prior to enlistment or prior to being ordered to active duty (for Reservists). This includes members of the Army, Navy, Marine Corps, Air Force, Coast Guard, as well as commissioned officers belonging to the Public Health Service and those in the National Oceanic and Atmospheric Administration (NOAA) who are engaged in active service. Military reservists ordered to report for military service and those persons ordered to report for induction under the Military Selective Service Act as well as guardsmen called to active service for more than 30 consecutive days are also covered under the act.

In the area of home mortgage protections, the act limits the amount of mortgage interest that may be charged on home loans incurred by a service member (including debts incurred jointly with a spouse) before he or she entered into active military service.

Once requested by the home owner, mortgage lenders must reduce the interest rate to no more than six percent per year during the period of active military service. They must also recalculate future payments to reflect the lower rate. This provision applies to both conventional and government-insured mortgages.

It is important for those covered by the act to understand that this is not an automatic system. In order to request temporary interest rate reduction, you must send in a written request to the lender. This submission must include a copy of your military orders. The request may be submitted as soon as the orders are issued but must be provided to the lender no later than 180 days after discharge from active duty military service.

Some of those who are covered by the act may find that they cannot make the payments even at the lower rate. If this happens, the lender may let the member stop paying on the principal while the member is on active duty. They are not mandated to do this, but many of them will. The amount that is adjusted will still have to be paid but at a later time, once active duty service is completed or financial status of the member improves.

It is also important to know that many home mortgage lenders have other programs available to help those in need. If you or your spouse should fall into this category, contact your lender immediately and ask about loss mitigation options.

For those with FHA insured loans who are finding it difficult or impossible to make the required payments, FHA has special forbearance and other loss mitigation options that you may be eligible for.

Lastly, those covered under the act should know that mortgage lenders may not foreclose, or seize property for failure to pay, while a service member is on active duty. They may not do foreclose, as well, within 90 days after discharge without court approval. In order to get court approval, the lender would need to prove that the service member’s ability to repay the debt was not affected by his or her military service.

You can learn more the Soldiers and Sailors Relief Act online or at your military base.

Being a college student is not easy at all. Between tuition, books, and living expenses, there are many times when money is so tight that one can hardly make ends meet. Keeping up with debt payments seem almost hopeless. If you are a student who is suffering trouble managing all your debt, consolidation of your student loans may help you best manage your accounts. When you consolidate your college loans, you save a lot of time and effort when it amounts to retrieving control of your personal finances. By paying a single loan instead of multiple loans with different collectable dates and payment rates, you quite possibly could reduce confusion and delays in your payments. It may even work to extinguish frustration and maybe produce savings by avoiding late fees. 

Under the current system, consolidating your student loans will actually get you a fresh loan. How this occurs is that the financial institution that will manage your loan consolidation will pay all your other creditors in full and open a new account for you under their company. Since consolidating student loans means obtaining a fresh loan, you will be in a good position to negotiate improved terms and conditions of loans. In many cases, banks, financial institutions, and private lending businesses will be ready to present you longer payment periods, smaller monthly amortization and lower interest rates. Technically, longer payment periods will actually make the payment bigger, but since the amortization is smaller you will not truly have much difficulty paying back the loan as soon as you graduate and acquired a good job.

Matters to Think Of When Consolidating Student Loans:

There are businesses who aid free your mind of stress and find your focus on your education. However, before you select a business to handle your debt consolidation, you should start shop the market place or get online to compare the student loans consolidation programs of various federal agencies, banks, and financial institutions. Never pass over the task of comparing the services of these financial institutions unless you wish to end up kicking yourself when you verify that some other institution is generating better terms and conditions. If you keep informed of the news, you know that in the present-day economy, each penny counts.

When consolidating student loans, pay close attention to the terms and conditions of the loan provided by the financial institutions. Do not only sign up for anything unless you are secure that you are getting the greatest bargain. Make sure that you get the best terms and conditions accessible. Almost all financial institutions are subject to negotiation when it comes to the terms and conditions of loans. Be certain to negotiate your terms well. Constantly remember that improved terms will help you pay for your debts and not become bankrupt as soon as you graduate.

By following these effortless guidelines you might even attain long term benefits. A good credit standing will affect purchasing a home more painless as well. You will be more ready to receive a better mortgage rate. That may likewise generate savings that can be applied to a possible early retirement program. The benefits of consolidating your student loans are endless and yours for the taking.

If you would like more information on this topic and Credit Card Consolidation Loans or if you are in need Debt and Bill Consolidation, Beatlands Credit Repair has many credit repair topics and tips that can be very useful.