Secured Consolidation Loans

Bright Oak can guide you to excellent Loan Brokers who will find the best low interest deal for you. Contact us to find out if a loan is the best option for you.

Introduction

Homeowners may be able to release equity that they hold in their home to pay off other debts. This can be accomplished via a secured loan. These are frequently known as “consolidation loans”.

In other circumstances using an expert loan broker may allow you to reduce the cost of your current monthly loan payments. This would help you to manage your other debt repayments.

Secured (or consolidation) loans can be a cheaper source of borrowing than other types of loans (such as credit cards) and therefore this option appeals to many people. They will typically have slightly higher interest rates than would apply to a mortgage. Consideration should be given to the fact that previously “unsecured” loans would become “secured” if using this option. A failure to keep up repayments in the future could therefore result in you losing your home.

Who Can Take out a Secured Consolidation Loan?

Any homeowner with “equity” (i.e. a home worth more than the existing mortgage plus any other loans secured on it) may be able to take out a secured consolidation loan.

Remember secured consolidation loans are a serious decision and guidance should be taken from experienced secured consolidation loan brokers. This will preferably be a loan broker with experience in obtaining the best deal for clients who may have current or previous debt issues. We would recommend you choose a broker with access to the whole loan market, rather than a single loan company you might find advertising in the newspaper or on TV. This will help you to get the best consolidation loan available on the market.

How Does a Secured Loan Work?

Again, we strongly advise anyone considering a secured/consolidation loan should contact an independent loan broker.

A good loan broker will conduct a fact-find exercise with you to learn more about you, your personal and financial circumstances, and your attitudes to various matters that are important to the type of loan that you may choose to take out.

Based on the considerable information gathered, a good loan broker will scan the whole secured loan market to find a loan that meets your needs, requirements, and attitudes. The best product will be recommended to you.

Fees and Costs

Secured consolidation loan brokers may get paid in two different ways.

A lender who supplies secured consolidation loans will pay a commission based on the size of the secured consolidation loan.

In addition a loan broker is likely to charge you a fee for their work and expenses in securing the best loan deal for you. It may also cover the cost of property valuations etc. Most frequently this fee can be added to the loan itself rather than paid out of your current funds.

Summary of Secured Loan Advantages

• Typically lower interest rates available compared to other types of borrowing.
• Equity released can be used to pay off debts releasing the pressure from you.
• Repayments can be spread over a longer period, reducing the monthly cost.
• Creditors might be prepared to accept a lump sum (less than the amount you owe) in full and final settlement of all debts. Bright Oak could help negotiate such an arrangement on your behalf.

Potential Secured Loan Disadvantages

• Secured consolidation loan debts secured on you home could result in losing your home if you become unable to keep up repayments. Consulting secured consolidation loan experts such as debt advisers is wise before making this decision as other options such as an IVA might be more suitable.
• Secured loans are typically put in place for many years. Even with low interest rates your using a secured consolidation loan may end up with you paying more interest overall.
• Self-control is required to avoid the temptation to once again build up unsecured debts (after the previous debts have been cleared using a loan).

Bright Oak can guide you to excellent Loan Brokers who will find the best secured consolidation loan deal for you.

Contact us to find out if it’s the best option for you.