Secured loans
A secured loan is a loan that is secured on property. In most cases this property is usually the customer’s home. Even though there may already be a mortgage secured on the property, a lender can take a second charge behind the first charge being held by the mortgage company. Secured loans will then run independently of the mortgage.
Some mortgage lenders register a restriction at HM Land Registry when they register their interest in a property. This basically means that they have to give their consent in order for anyone or any other lender to register a second or further charge on that property. To obtain consent for a second or further charge is usually straight forward and consent is usually provided in most cases. However, some mortgage providers refuse to give consent when there are mortgage arrears on the account or when the account has been conducted poorly.
What you can do if your mortgage company will not give consent to a second charge:
Remortgage – do not need consent from your existing mortgage provider if you are going to change mortgage companies. All that is needed is a redemption figure and sometimes a mortgage reference.
Try another loan company – Some loan companies will secure their loans by registering their interest in the form of a ‘caution’ at HM Land Registry. Consent is not required in order to register a caution on a property.
Speak to the mortgage company and ask them to reconsider. Explain the difficulties that you have been having and explain how the loan is going to make life easier for you. For example: You need the loan to consolidate a lot of expensive credit, therefore reducing your monthly outgoings which will help you to pay future mortgage payments on time. You could also mention that all arrears will be paid directly from the loan, therefore putting your account back in order. It would not be helpful to say the loan is for a new car or other luxury item(s). This would mean at a time when your mortgage payments have been late, which would signify that you are struggling financially, you now want a loan which will result in increased monthly outgoings. A new car maybe a bit more acceptable if the car was a requirement for a job promotion that meant you would be increasing your income. A new job is not so effective due to concerns that lenders have over probationary periods.
A secured loan is a loan secured on property, which in most cases is usually an applicant’s home. It will that will run alongside your mortgage but will be completely separate. Your mortgage lender will usually have to consent to this loan and this is very much dependent on your payment history and general credit status.
People mainly take out secured loans for one or more of the following reasons:
for debt consolidation
home improvements
a new car
to start a business or business expansion
to purchase an investment property
a holiday home
Be careful what you say the money is for. Some lenders will not lend for the following:
Cosmetic surgery or medical treatment
To purchase investment property
To start or expand a business
To buy a taxi
To buy a holiday home, especially if not in the UK