Last post: Nov 24, 2017
The popularity and availability of second charges is surprising even seasoned finance professionals this year. Following the product’s post-credit crunch rehabilitation, secured loans are proving to be an in-demand option for many clients.
Following the economic and financial dark days of the global financial crash, secured loans (also known as second charges) took a deep dive into a bad reputation. In recent years they have re-emerged with tightened regulations and plenty of checks and balances in place in order to ensure successful lending and borrowing processes.
While high street lenders are re-tightening their grip on lending amid the economic uncertainty triggered by Brexit, brokers and non-traditional lenders are increasingly working with consumers looking for accessible finance.
Available to the majority of homeowners, secured loans allow consumers good access to finance when emergency funds are required. From totalled vehicles to educational funding and vet bills, secured loans are used to fund a variety of expenses and can be arranged for a wide range of amounts. At Choice Loans, for example, we can help consumers arrange secured loans from £1,000 to £250,000, based on their personal finances and subject to affordability checks.
But an increasingly "clammed up" high street banking sector isn't the only factor contributing to the rising popularity of second charge loans. In fact, many industry commentators have described the current economic climate as a "perfect storm" for the product.
From the launch of the Mortgage Credit Directive, and brokers finding new ways to demonstrate the benefits of this product to consumers thanks to helpful comparison and sourcing tools, to uncertainty surrounding the UK's financial future prompting many to search for fixed-rate borrowing options that don't include overpayment penalties, there are all sorts of factors at play which have created a prime environment for secured loans.
Although second charges typically feature higher interests rates owing to the higher risk nature of the product, the sheer flexibility and innovation in this sector, teamed with an unstable financial climate, are at the crux of the secured loan perfect storm.
Interested in learning more about how secured loans work and whether they could be a good fit for you? Explore our website or contact our expert team today for more information and guidance.
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