Secured loans can be taken out against almost any viable property. This includes any buy to let property you own, residential or commercial.
Lenders impose their own restrictions and qualification criteria where secured loans are concerned, it is therefore advisable to consult with an independent broker and explore the options with a secured loan calculator, before submitting your application.
How does a secured loan work?
Secured loans differ from unsecured loans in that they are issued on the basis of security. The equity you have tied up in one or more properties is considered something of an insurance policy by the lender. You enter into a contract wherein you agree to repay the full balance of the loan within a specific timeframe, otherwise the lender may take possession of the property.
What are the benefits of a secured loan?
The major benefit of a secured loan is the opportunity to access preferential interest rates and lower overall borrowing costs. Secured loans are considered significantly less risky than many types of conventional loans, given the security provided in the form of the property used to secure the loan. In addition, applicants with eligible security may qualify for a secured loan with poor credit or even a history of bankruptcy.
Where can you get these types of secured loans?
Secured loans taken out on buy to let properties are not always readily available on the High Street, however, there are dozens of independent specialist lenders across the UK who specialise in this type of secured lending. Consulting with an independent broker is therefore essential, in order to ensure you target the right lenders with your application and get an unbeatable deal.
How much can you borrow?
Policies vary significantly from one lender to the next, in terms of maximum loan amounts and LTVs (loan to value). As a rule, most specialist lenders are willing to offer loans of up to 75% or more of the total value of the property. If you own a buy to let property with a value of £200,000, this will mean a maximum loan amount of £150,000, however, some lenders are willing to offer as much as 90% or even 100% LTV in special circumstances.
What can Secured loans be used for?
The type of secured loan you apply for will determine if and to what extent restrictions apply. In some instances, lenders are only willing to provide secure loans for very specific purposes, such as refurbishments to existing properties. By contrast, others place no restrictions whatsoever on their loans, which can be used for any legal purpose whatsoever.
What is the best way to apply?
Irrespective of your intentions for the loan and your current financial situation, it is essential to consult with an independent broker before applying. Doing so will ensure you are appropriately familiarised with all available options and gain access to the independent advice needed to make the right decision.
For more information or to discuss potential benefits of secured loans in more detail, contact a member of the team at UK Property Finance today.
Craig Upton has worked with popular British brands and SMEs gain exposure online and is committed to creating new opportunities. For contact with Craig: craig@iconquer.com.
