Tenant Loans

Capital repayment – each repayment pays backs some of the capital (amount borrowed) and interest. Providing all repayments are made on time the loan will be settled in full at the end of the term.

There are various types of secured loans available. For example:

Interest only – repayments are interest only. Providing all are made on time the balance at the end will be the same as it was at the start. Customers need an “exit route” (a source of money that will settle the loan in full).

Fixed rates – the interest rate charged is fixed for a number of years. When the fixed rate ends the customer pays the lenders standard variable rate.

Variable rates – the interest rate charged can vary up or down.

Tracker rates – the interest rate charged is set at a margin above the Bank of England’s base rate. For example if the base rate was 0.5% and the margin 3.5% the customer would pay 4%.

There are various reasons why clients may find a secured loan more attractive. The most common reason clients may want a secured loan to raise finance is if it provides a better alternative to re-mortgaging i.e. their mortgage has high early repayment charges or they are on a really good rate and don’t want to lose it.

Also lenders in this sector tend to be more flexible and many are prepared to consider non-standard applications such as complex income, adverse credit, older ages & unusual loan purposes. This is because, unlike unsecured loans, there is an asset being used as security.

Firstly, calculate the realistic amount that you are able to repay – don’t underestimate, as this could result in a longer repayment and higher interest! On the other hand, make sure you don’t overestimate as you don’t want to risk being unable to make the payments … In other words, careful planning is vital!

They are available for virtually all legal purposes. Home improvements, tax bills, new car to name a few.

Unlike fixed rate loans (where interest is fixed for the longevity of the loan), the rates of some secured loans are variable … this means they can alter depending on the UK base rates.

When planning to convert a fixed rate debt (eg. a standard personal loan) into a variable rate, always make sure you have complete confidence in your ability to afford the repayments in the event of a base rate increase. Rate fixes are available for certain types of secured loans, but this can sometimes only be for a limited period. Always make sure to check if penalties are included when you choose to pay off an existing debt early, as this is can be fairly common.

The interest rate depends on a few factors including your credit score (a), the size and length of your loan and the free equity (b) in your home. These factors are assessed in a variety of ways by your lender, for example the rate may be ideal for borrowers with good credit scores and limited equity but could prove to be uncompetitive for people with high equity and a poor credit score.

1. Credit Score – There are a variety of factors that can influence your credit score … the most important are income, repayment failures, debts, County Court Judgements, arrears and bankruptcy.
2. Free Equity – Free equity is calculated using the difference between property value and the outstanding balance owed. You will be offered a better rate if the difference between the two is higher.

Loans from £5,000 to £2.5 million

Terms from 1-25 years

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