Loans have two main types and what these are are the unsecured type and the secured version of loan.
As the name unsecured clearly states unsecured loans require no security of any kind, and this is what makes them available to both tenants and homeowners.
It has always been difficult for tenants to get a loan of any kind as they cannot offer any security.
Secured names are again, as their name suggests, a form of loan tht must have some sort of concrete guarantee, and in the case of personal secured loans the security necessary is the homowner's property.
A secured loan is also a much more rare commodity now than it was pre credit crunch.
The secured loan sector is 80% or more down on the figures at the emd of 2006 nd beginning of 2007.
This is mainly due to the fact that the underwriting criteria of secured loan lenders has tightened to such an extent that many who were eligible for a secured loan in the past no longer are.
Secured loan lenders have gone out of business one after the other and similarly have finance brokers.
There are fewer secured loan lenders in the market now, and secured loans have been around for over quarter of a century.
If a person is a homeowner and is in full time employment, secured loans are a good low interest way to raise funds.
The homeowner loan is secured, as already mentioned ,against the equity in a property.
Equity is the figure that remains when the mortgage balance is deducted from the property vale.
If a property is valued at £240,000 and the outstanding mortgage balance stands at £150,000 the available equity is £70,000.
However, as 100% and plus equity plans have long gone, this does not mean that that particular homeowner can borrow £70,000, as he could have done prior to the economy crumbling in the UK.
The maximum loan that an employed applicant can borrow stands at 80% maximum, and therefore based on the previous figures the most that an employed applicant could borrow would be £42,000.
Self employed can only borrow up to a maximum of 70%, making the maximum borrowing available on this occassion £18,000.
Self declarations of income for the self employed have now virtually disappeared and often a lender will ask for an accountant's certificate to provide additional income proof.
The FSA has regulated the insurance and mortgage sectors for some years now and there is talk that their regulation of secured loans is on the cards.
Therefore for any self employed people out there considering taking out a homeowner loan they will have to act now while there are still a couple of lenders who do not yet require any back up proof of income and who accept pure self certs. before they are as extinct as the dinosaur.
There is no time for delay for self employed applicants requiring a secured loan soon.
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