Secured Loans – Know Your Rights

The market that is secured loans has suffered from a slightly tarnished reputation these last few years. Sensationalist stories of homeowners being mis-sold secured loans, suffering mountains of debt and even losing their homes saw many people lose confidence in secured loan providers.

However with more homeowners now turning to secured loans as a necessary method of finance there have been recent moves to restore people’s faith in the product.

The most important area being making sure homeowners know exactly what kind of debt they are taking on, how it affects them, the risks involved and what rights they have as customers.

If you are taking out a secured loan for up to £25,000 it will be subject to The Consumer Credit Act 1974. It is important to familiarise yourself with the make-up of this Act before proceeding with your application. One of the main points is that a secured loan lender must provide a seven day consideration period during which you can decide to pull out of the agreement at no cost.

Secured loans of more than £25,000 are currently unregulated. This is the root source of most of the bad press associated with borrowing against your property. Due to this it is vital to seek out independent expert advice when considering a secured loan for more than the regulated amount.

The waters are getting clearer but they are still a little murky. Make sure you fully understand the commitment you are making before signing on the dotted line

Increased Awareness of Secured Loans Required

According to one UK secured loan broker more communication is required between secured loan providers and independent financial advisors to increase customers’ awareness when it comes to secured loans.

With the level of consumer debt in the UK rolling past £1.3trillion more people struggling to cope with their debts could find a secured loan suitable for their needs. However, the secured loan broker Click insists IFAs could utilise secured loans more affectively, to help people in the red, by improving their own knowledge of the products.

Clicks comments come at a time when the FSA is focusing on Treating Customers Fairly (TCF).

With more homeowners looking to secured loans for finance many IFAs would be well advised to take up Clicks advice and hone their knowledge on the working of secured loans, Click has set the ball rolling with the launch of an initiative to strengthen their relationships with IFAs.

However while offering customers better advice on the potential of secured loans IFAs should also remember to point out the downsides of the form of borrowing.

Increasing business and revenue for secured loan brokers must not be placed ahead of finding the right deal for the customer.

Secured Loans on the Increase

More and more UK homeowners are making applications to increase or extend their mortgage and being rejected. This is a result of rising interest rate,s as is the increasing number of people opting to tie themselves to fixed rate mortgage deals.

Those homeowners who need to raise finance but are having trouble remortgaging are now turning to secured loans as an alternative form of finance. This form of finance is also becoming more popular with those people who have CCJs and poor credit history. Mainly become they find it easier to get accepted but also because the can take out secured loans with long repayment periods to reduce the monthly repayment, although of course this does massively increase the overall amount repaid

While secured loans are becoming an increasingly specialised area borrowers should bear in mind that the loan is secured against their property and that failure to make payments can be met with dire consequences.

Just because the option is there does not mean it is the right choice for everyone. Secured loans can be handy when used correctly but always take careful consideration before committing to this form of finance.