Your bank may offer 100’s of products and plans. Promise Money has over 10,000
Secured Loan for bad credit. Designed for borrowers struggling to get loans elsewhere
Do you think you have bad credit?
Some secured loan lenders might think it’s fine
Discover how a secured loan for bad credit could be just what you are looking for, and how to get one. Watch our videos or read below.
What is a secured loan for bad credit?
A secured loan for bad credit is a second charge loan for people who own a property and have had credit issues in the past. Ideal for borrowers who are not eligible for “prime” products as these are aimed at people with better credit histories.
Some of the features of our bad credit home loans include:
Borrow up to 75% of your property value with heavy arrears and CCJ’s
Even if you have a few months mortgage arrears now we have lenders which will lend up to 100% of the property value
Loans are available to clear IVA’s, Debt Management Plans and Bankruptcies
You can secure the loan against your home or property you rent out
A variety of loans are available up to £1 million depending on your credit profile
We have lenders in England, Scotland and Wales who consider bad credit
Are you a tenant or live with family?
A secured loan for bad credit wont help you if you don’t own your home or another property. Click this link to unsecured loans for bad credit . It could be exactly what you are looking for.
Understand your credit score.
Don’t assume you have bad credit
Many people assume, just because they have a low credit score, they have bad credit. Firstly that isn’t the case as many lenders don’t even look at the credit score.
Therefore you need to understand the raw data which goes towards making up your credit score. This is the information many lenders will look at, and will determine the rates of Interest you will be offered and likelihood of success in getting a loan.
Check out this video which will help you understand how lenders view your credit file.
You can get a free credit search which gives you results from 3 separate credit agencies. Click for a free Credit Search. This tells you what the lenders see and helps get brokers like us on the right track immediately. Most lenders don’t do their own credit search until much later. You can get your free credit search here. It’s free for 30 days but remember if you want to cancel it as it costs £14.99 per month thereafter – Ad.
Who can apply for a homeowner secured loan for bad credit?
Anyone can apply for a secured homeowner loan as long as they are over 18 and own a home. Here’s some examples of how we can help which should give hope to those with credit problems looking for a secured loan.
Arrears, CCJ’s and default’s more than a year ago
Most lenders disregard these problems. They often only check your finances within the last year so you could qualify for some of the lowest rates in the market.
Large recent CCJ’s
Imagine you had 4 large CCJ’s in the last 12 months ago but have now paid them all off. Fortunately, we have a lender which ignores settled CCJ’s and default’s. They could potentially offer you lower rates than you might expect, subject to their other normal checks.
Historic mortgage arrears but up to date now
You could have missed numerous mortgage payments over a year ago. But you have been paying extra to catch them up as recently as a month ago. As long as your mortgage is now up to date, and you have kept up with regular payments for the last year, we have lenders that won’t penalise you and will offer loans at their lowest rates.
Heavy recent mortgage arrears or CCJ’s
You could have had numerous CCJ’s and defaults or missed 6 months mortgage payments in the last year all of which are still outstanding. Even so, we have lenders which will accept this although their rates are higher than our prime lenders. However, if they believe you can now afford to maintain your commitments, and there is sufficient equity in your home, you can apply.
IVA’s, debt management plans and bankruptcy
Those people affected by bad credit can turn to a debt management plan, an Individual Voluntary Arrangement (IVA) or even bankruptcy to help deal with the situation. High street lenders routinely reject applications from those with historic credit problems. Later on, applicants often wish to exit the arrangement in order that they can apply to mainstream sources. We have lenders willing to consider applications from those in IVA’s, DMP’s or bankruptcy providing the loan would improve their overall position. Common sense lending at it’s best.
The team at Promise Money has over 30 years experience finding the right secured loan for borrowers with a poor credit profile. With over 2500 secured loan plans on our in-house sourcing system there are a great many problems we can help resolve. Try out our calculator to estimate your repayments depending on credit profile.
Why should I choose a secured loan for bad credit?
A secured loan can be a very good way to clear your previous credit issues to help put you on the road back to having a clear credit history. Generally first mortgage lenders and unsecured lenders are far less likely to accept your application. If they do the rates are likely to be higher. It may be more suitable to keep your existing mortgage at the lower rate and only borrow the extra amount at a higher rate.
As your home is used as collateral the rates are comparatively lower than many unsecured loans which may be accruing arrears and interest rate repayments. Our advisers will look at the rates you are paying at the moment. They factor this in to the loan they recommend so you don’t borrow more than you need. For example it may make sense to settle some credit where you are paying a high rate. However, keep some of your low or zero interest rate credit cards.
It will also be beneficial if you are looking to remortgage but have been declined because of your credit profile. Invariably, if your credit profile is poor many remortgage lenders will decline you. However by using a secured loan and clearing the arrears, in a year or so you may be able to remortgage on to lower rates. This is because it will look to remortgage lenders that your financial history has improved.
What about debt consolidation?
You may also be able to consolidate some of your debts into one repayment. This may be useful if one of the reasons you slipped into arrears in the first place is due to the number of loans you are having to pay each month. If you are consolidating then it’s important to note you won’t be debt free, just replacing several loans with one loan.
If you do use a homeowner loan for bad credit the individual monthly payments may be cheaper. However, as a secured loan will probably be borrowed over a longer term, the total amount you pay may be higher as you are paying interest for longer. However you can shorten the term by paying the loan off sooner once your credit profile improves. As well as this, your home is used for collateral so it can be repossessed if your fail to keep up repayments.
What alternatives are available?
Remortgaging / Further Advance
Of course an alternative is remortgaging is asking your existing lender if you can borrow more money. That assuming you still meet their policies and you have enough equity in your property. However, most mortgage lenders are reluctant to lend to people with bad credit but it may be an option if your credit issues are only minor. We will consider these options as part of our overall advice.
Unsecured Personal Loans
An unsecured personal loan is a loan where you don’t put up an asset as security. This means if you fail to keep up repayments no assets can be repossessed. However these types of loans are very dependent on credit score so can be very difficult to get with a poor credit score. Also the amount you can borrow is significantly lower than if you were to borrow the money secured on an asset.
Be very wary of payday loans in this area of the market as these charge very high interest rates and can result in a payday loan cycle, a vicious circle where you can’t repay the first payday loan so you take out another one to pay it off which goes on and on. Many secured lenders are also wary of customers who have taken these out recently as it suggests you cannot control your finances month to month.
A guarantor loan is another type of unsecured loan. These loans require a guarantor to co-sign the agreement and if you fail to keep up repayments then the responsibility of paying off the loan passes onto the guarantor. The guarantor is usually a trusted person close to the applicant such as a parent or friend who has a better credit history than them to offer reassurance to the lender.
Rates can be high as it is unsecured finance and it is worth considering the potential impact on your relationship with your guarantor if things go wrong. In particular, a report by Citizens Advice said that many guarantors are often left unclear about just what responsibilities they have for the debt and as some of them fall outside the FCA cap on payday loans, they have said they can be just as damaging as payday loans.
Peer to Peer Lending
Peer to Peer Lending (P2P) is a new type of lending that has sprung up online in recent years. P2P lending is when you borrow off strangers online as opposed to a traditional lender or bank. The strangers that lend you the money are doing it in a similar way to crowd funding. As you repay loans back the interest repayments get split in proportion to how much they have invested in your initial loan.
This type of lending can offer you better terms than a traditional unsecured or guarantor loan but as it is a fairly new industry it isn’t as strongly regulated by the FCA. It can be compared to the other options, but if things go wrong there are less support out there.
When should I apply for a homeowner secured loan for bad credit?
If you are falling increasingly into a cycle of missing repayments and your credit history is getting worse then the short answer is as soon as possible. If you can sort your finance before things get too out of hand you will probably find it easier and should get a better rate. Even so, some people simply bury their heads in the sand and let things get on top of them. Even so, we have still been able to help.
In terms of applications, most should take around 4 weeks to fully complete if you have all the information on your income and circumstances to hand. Very few people are that organised so its sensible to allow longer and much of this is in your control.
However the first step is to have a free telephone consultation with a Promise adviser who will make sure that the loan you apply for is suitable. Each adviser has to follow the Financial Conduct Authority guidance which means having your best interest at heart and treating you fairly.
Ways you can help speed up the process include:
Ensure you have all documentation to hand.
Have an accurate estimate of your monthly household expenditure and how much you want to borrow to clear the debts.
Answer requests for information promptly and as accurately as you can.
Be open and honest with your adviser – they are on your side.
Where else can I go if I am struggling with serious credit issues?
If you are struggling with bad debt already or need some more information on how to better manage your finances, then the Money Advice Service has plenty of information.
Also there are various debt charities, such as StepChange, who can provide specific advice and tips for people struggling with bad credit who require immediate support.
Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG
Authorised and regulated by the Financial Conduct Authority – Number 681423The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages
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