Secured Loans Surrey
Secured Loans Surrey
A secured loan is a way of borrowing money whereby you offer your home as security to the lender. If you miss repayments, the lender can repossess your property to recover their money.
To take out a secured loan, a second mortgage, or a second charge on any property (whether that’s in Surrey or further afield), you must have a mortgage secured against your property.
With a secured loan, you are offering the equity in your property as security to the lender. You can raise more finance in Surrey, where house prices are higher than in most parts of the UK.
According to Rightmove, the average property value in Surrey is circa £640,000, with Wentworth being the most expensive area to live in and the cheapest being Stanwell.
Surrey is a desirable area to live with excellent commuter links to London and the South Coast. If you are fortunate to have a property in Surrey, it is often desirable to improve rather than move home, so secured loans in Surrey are becoming increasingly commonplace.
Can I Borrow Money Against My Surrey House?
You can generally borrow money against your home in Surrey (or any UK location), whether it's for home improvements, a holiday home, or another big expense like a wedding. The amount you can borrow depends on several factors, including:
Your age. The criteria will vary from lender to lender, but typically, lenders like to see the loan paid off by the time you are aged 70 - 75.
Equity - Equity is the difference in the value of your property against any mortgage amount secured on the property. If a property is worth £500,000 and someone has a mortgage of £300,000, then there is £200,000 of equity.
Affordability - Every lender will conduct a detailed affordability assessment to ensure you can comfortably repay the proposed monthly loan repayments. You must make the repayments throughout the whole term of the loan because, as mentioned, you may lose your home if you cannot make the repayments. You should carry out your own income and expenditure assessment to ensure you can easily afford the monthly repayments. Remember to make allowances for a potential reduction in overtime or bonuses.
Credit score. Every lender will carry out a credit check to see if you have any bad credit registered against you. Bad credit might result from missed repayments on loans, credit cards, and mortgages. Other forms of bad credit might be a default or county court judgements (CCJs) registered against you. It might be a good idea to apply to a credit reference company to get a copy of your credit report before applying for a loan. Applying for a report will not negatively affect your credit score.
The property you are offering as security must be mortgagable. The definition of mortgagable varies from lender to lender, but generally, it needs to be a liveable property with a working kitchen and bathroom. Some types of properties, including mobile homes, are not considered mortgagable by most lenders.
As with all loans, the higher your credit score, the lower the interest rate, and the lower your credit score, the higher the interest rate you will have to pay,
How To Get A Secured Loan For Your Surrey Property
One way to get a secured loan is to directly approach some lenders to see who offers the best product for your circumstances. However, this is not easy as most lenders that operate in the secured loan market are not recognisable high-street lenders.
Lenders that offer second-charge mortgages are often challenger banks that only accept business from FCA-regulated mortgage brokers. This is because a mortgage broker will give professional independent advice and find the best product from their panel of lenders. Challenger banks are smaller than traditional high-street banks and compete with them using modern financial practices. Most do not have a branch network and operate online. Challenger banks include United Trust Bank, Shawbrook Bank, and Tandem Bank.
The benefit of using a mortgage broker is that they will consider all types of loan options for you, which might include:
An unsecured loan or personal loan. These loans tend to be for smaller loan sizes, typically £3,000 - £25,0000. One significant advantage of an unsecured loan is that it can be arranged quickly; notably, you do not offer your property as security to a lender. With unsecured loans, applications are often agreed on the same day, with funds sent within 24-48 hours. To benefit from a competitive interest rate, borrowers must have a good credit score with no bad credit registered against them.
A further advance from your current mortgage lender. It’s often a quick way of getting the funds you need. If you have a good track record with your lender, they will likely look favourably to lending you additional money. They will carry out a new affordability assessment and may ask for up-to-date wage slips to evidence your current income.
A remortgage. This might be a good option if your current mortgage doesn’t have an early redemption charge. Your broker will look at your current mortgage deal and see if he can better it with a new mortgage from a different lender.
A secured loan. If you have early redemption charges with your current mortgage, it might be worth keeping it and raising the additional funds with a secured loan. The average loan size with homeowner loans in the UK is £46,000.
To get a secured loan for your Surrey property, apply online to a comparison site specialising in secured loans. The site should provide you with an indicative quotation for you to see if the loan is affordable. You can formally apply for the loan if you feel the monthly repayment is within your budget.
You need to remember that when borrowing against your home, the equity in your home will have a bearing on the amount you can borrow and the monthly payments.
Completing a secured loan application can take one week to eight weeks (or more), depending on your circumstances and the lender's criteria. The quicker you provide the requested paperwork, the quicker your loan application can progress.
What Documents Do I Need For A Secured Loan?
The paperwork you need to provide for a secured loan in Surrey would be the same as if you were applying for a loan in West Sussex, Somerset, London, or indeed anywhere else in the UK.
You must provide proof of identity, generally through a passport or driving licence. In addition, you will need proof of where you live in Surrey if you are not showing on the voter’s roll. This would be in the form of a utility bill or bank statement.
Other documents, such as a marriage or death certificate, may be required depending on the application. Your mortgage broker will tell you exactly what documents you need to produce.
It is best to return all the paperwork in one go to enable your application to progress smoothly and quickly. If you forward the paperwork sporadically, it's unlikely your application will move any quicker, as lenders will only consider your application once they have all the documentation.
If you can't find a particular document that has been requested, please speak to your mortgage broker, who may be able to suggest an alternative document that you can produce.
For further advice about secured loans in Surrey or anywhere else in the UK, speak to our expert team today.