Secured Loans with Bad Credit

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Secured Loans with Bad Credit

What is a secured loan for bad credit?

This is a loan that people take out which is ‘secured’ against an asset such as your home. As it is secured against an asset in the event that you are unable to pay the loan the asset could be repossessed. As the loan is ‘secured’ lenders are more willing to provide these to clients that have bad credit registered against them such as missed payments, default &/or county court judgements or if you have simply a low credit score.


Why do people take out a secured loans?

Bad credit secured loans are taken out for many reasons such as:

  • Home Improvements - Maybe you need to carry out home improvements such as new kitchen, bathroom and /or new window’s or on a larger scale perhaps you want to do a loft conversion or an extension.
  • Debt Consolidation - If you are struggling to keep up with your current debts and have missed some payments, maybe a bad credit secured loan would be an option where you can consolidate your debt into one monthly payment with a lower interest rate.
  • Buy a Car - May be you need a new car as the family is getting larger and your existing car is no longer suitable or reliable enough.
  • Raise a Deposit - May be you want to buy a property with the intension to rent it out long term as an investment and you need to raise a deposit alongside a Buy to let mortgage or perhaps you wish to help out your children with a deposit so they can get on the property ladder.
  • Pay Tax Bill - Maybe you have an outstanding tax liability which needs to be paid.
  • Invest in your Business - May be you want to invest and expend your business by purchasing assets such as a new office or machinery.

Can you go direct to a secured loan bad credit lender?

Most secured loan lenders offer their loans through mortgage and loan brokers, such as The Money Hub, and approaching them directly is not an option. Your broker will discuss your needs, try and source a suitable lender based upon many factors such as affordability, equity you have within your property and the bad credit you have registered against you.


Is it possible to get a secured loan for bad credit with an instant decision?

Unfortunately it is not possible to get an instant decision, however an experienced adviser can give you an idea of possible options fairly quickly. These are the steps that the bad credit secured loan adviser will go through:

  1. Complete a Fact Find to assess your circumstances and needs.
  2. Review your credit report paying close attention to any bad credit registered such as missed payments, defaults and county court judgements.
  3. Source a lender and provide you with a quotation suited to your requirements.

At this point you should take your time, consider the quotation and other options you may have available. If you wish to proceed your adviser will outline the next steps to submit your application.


What interest rate will a secured loan for bad credit be?

This can depend upon many factors such as:

  • Bad Credit - What bad credit do you have registered against you, when was it registered, how much was the bad debt for? What type of credit did you miss the payment on? And have you managed to resolve this?
  • Equity - If you have lots of equity within your property you will have more lenders possibly willing to help you and offering a lower rate when compared to a small amount of equity which would be more risky for the lender.

Interest rates on secured loans are higher when compared to main residential mortgages.


How much can you borrow on a secured loan with poor credit?

This depends upon how much you can afford to borrow and how much equity you have within the property. To assess how much you can afford to borrow your adviser will carry out a full income and expenditure review to ensure any new borrowing will be affordable in the short and long term. To assess how much equity you have a valuation will be required of the property. This valuation could be either an online valuation or a full physical inspection.


How long can you take out a secured loan for?

Secured loans can be taken out over a longer period of time and some lenders allow you to borrow the money for up to 30 years. Always be aware that borrowing the money over a longer time period will lower the monthly payments however you will pay back more interest in the long run.


Are Secured loan lenders more flexible compared to your high street lenders?

Here are some examples where secured loan lenders are more flexible when underwriting loans:

  • More Accepting of Bad Credit - These lenders can help if you have had missed payments, defaults, county court judgements, payday loans, bankruptcy, Individual Voluntary Arrangements and debt management plans.
  • Income - Many high street lenders require a minimum of 2 Years Business Accounts, however some secured loan lenders allow just 1 years accounts or can be more flexible where you have changed from Sole Trader to a Limited Company.

What causes a poor credit history?

The main cause of a poor credit profile is due to missed payments which have taken place. When you miss a payment the lender will put a mark against your credit report. The more missed payments you have again more marks will be registered on your credit report. Potentially once you are 3-6 months in arrears the lender may then register a default against you. Failing to resolve this default could lead to the lender taking you to court over the debt and this could result in a county court judgement being registered against you. If you pay the debt within 30 days of a judgement being made against you, you can request that this judgement is removed from your credit report.


How do I find out if I have bad credit?

There are 2 main credit agencies within the UK being Experian and Equifax. By visiting their website you can request a copy of your credit report. This report will hold all your credit information covering the last 6 years. Have a good look through this and make sure it all looks correct. If you have a dispute, speak to the lender directly to try and resolve.

There is also a company called CheckMyFile and they produce a single credit report which shows data from both Experian and Equifax which is a good place to start.


What other ways can I borrow money except from a secured loan?

When looking to borrow money there are possibly many ways in which this can be achieved such as:

  • Remortgage - Could you take out a new mortgage with your existing lender or another lender from the market.
  • Further Advance - May be your existing mortgage lender provides further advances, so you can take out further borrowing from them. This would also be secured on the property.
  • Unsecured Loans - Your high street banks offer unsecured loans plus there are many online lenders who could possibility help.

You should always explore all the borrowing options you have available and take your time to calculate what is the most cost effective. A mortgage broker, such as The Money Hub, could help you with this and give you some advice.


How long does it take to arrange a secured loan with bad credit?

From application to completion it normally takes around 4 weeks. To ensure a smooth application you should:

  • Answer the questions your adviser asks fully and in detail.
  • Provide all the required documents promptly.

How do I apply for a bad credit secured loan?

The mortgage and loan advisers at The Money Hub would be happy to help you. You can get in touch by completing the enquiry form above or call the office. Please have copy of your credit report to hand as this would be needed to give you an idea of your options.

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THE ACTUAL RATE AVAILIABLE WILL DEPEND UPON YOUR CIRCUMSTANCES. PLEASE ASK FOR A PERSONALISED ILLUSTRATION.

LOANS MAY BE SECURED ON YOUR HOME. YOU WILL HAVE TO PAY EARLY REDEMPTION CHARGES THIS WILL VARY. A VARIABLE RATE LOAN MAY GO UP OR DOWN IN LINE WITH THE BANK OF ENGLAND BASE RATE. IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

WARNING: LATE REPAYMENT CAN CAUSE YOU SERIOUS MONEY PROBLEMS. FOR HELP, GO TO MONEY ADVICE SERVICE.

Secured Loan FAQ's

Are Secured loans a good idea?
This all depends upon your circumstances. You should speak to a mortgage or loan adviser for advice to help you explore all the borrowing options you have available - only then you can judge whether a secured loan is a good idea for you.
Are secured loans easier to get compared to a mortgage?
Although secured loans complete generally quicker than a remortgage the underwriting process is very similar, i.e. need to value the property, need proof of identity, need proof of income and ascertain the loan is affordable etc.
What credit score is needed for a secured loan?
Most secured loan lenders do not have a credit score threshold that you need to pass. They will review your credit report to assess your credit worthiness.
How do I secure a loan with bad credit?
The first step is to speak with a mortgage broker who is authorised and regulated by the financial conduct authority. They will be able to advise you on your mortgage and secured loan options plus you should also look to see if an unsecured loan is available. With the knowledge of knowing your options the broker can help give you advice in this area, the repayment terms and talk you through the application process.
Are secured loans easier to get?
As these loans are ‘secured’ against a property there is lots of due diligence that a lender will carry out on the transaction such as a valuation, full affordability assessment and credit profile review. Typical timeframe from application to completion is around 4-6 weeks, however an unsecured loan from a high street lender could be provided in a matter of days – so worth exploring all options.
Can you use a secured loan to consolidate debt?
Lenders do allow you to consolidate debt against your home, however there are pros and cons with doing this, so get good advice in this area. When considering consolidating debt you should explore mortgage, secured loans and unsecured loan options. If you have a poor credit history and therefore a low credit rating you may struggle to find an unsecured loan. Make sure the broker you speak to is authorised and regulated by the Financial Conduct Authority to give you advice in this area.

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Secured Loans with Bad Credit
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