Secured Loans with Bad Credit
Here at Just Mortgage Brokers we specialise in helping our clients to find the best secured loan rates, even when they have bad credit. Our aim is to help ease the process of finding the right secured loan for you, regardless of your bad credit history. All of our secured loans are designed exclusively for homeowners, ensuring that we will find the best solution for any financial circumstances.
bad credit secured loans
Needing access to finance for whatever reason – a cash injection for a business, some home improvements or perhaps consolidating a number of smaller debts being just a few examples – can leave you weighing up your options and wondering what solution will work out to be the most favourable, or provide the quickest result. For some, the option of a secured loan (also referred to in the industry as a second charge on your property) is the best course of action when looking at their borrowing requirements.
Finding the best secured loan – or the one that will cover your requirements and leave you in the most positive financial position – can be a more difficult proposition than finding the best mortgage, as these kinds of loans are not so widely available. If you are trying to find the best secured loan with bad credit issues, then the task can appear even more daunting, as many lenders will shy away from an individual they may perceive as being a higher risk.
However, not all lenders take the same attitude and there are a number of specialist lenders who may be willing to take your complete circumstances into consideration when assessing your application for a secured loan with bad credit. They understand that adverse credit events can be taken in context and that your overall situation will change over time.
Because of the number of variables involved with sourcing the right loan to meet your needs, as well as the shifting nature of the loans market, it’s impossible to say what are the ‘best’ secured loans at any given time. The best secured loan for you will be the one that most closely matches the amount you need, for the use that you need it for, at an interest rate that best suits your affordability, with a repayment plan that you will find most manageable.
When taking out any borrowing that is secured against your home or other property, it is always important to get professional advice so you understand the arrangement thoroughly and are aware of all the risks. Call us today to speak to one of our advisers who will be able to point you in the right direction.
Can I Get a Secured Loan with Bad Credit?
Having bad credit to your name can present a barrier to many kinds of financial products and lines of credit available through traditional routes and mainstream providers on the high street. In the current climate, where financial institutions are subject to tighter rules about lending, they are obliged to undertake thorough checks on potential borrowers and in general the culture is more risk-averse than it once was. Getting a secured loan with a poor credit record can be very much an uphill struggle. If you have an adverse credit history, it’s likely that you’ll have been refused a loan in the past.
However, you don’t need to worry, because even with a poor credit score or adverse credit events on your record, there are still potential sources of finance for you out there. Instead of wasting more time searching for a lender who will be willing to grant you a loan, by using an expert professional broker you will be able to access a selection of specialist lenders who don’t usually deal directly with the public, some of which offer loan schemes that have been designed specifically for prospective borrowers like you.
What is a bad credit secured loan?
Bad credit secured loans are loans designed for people with poor credit histories who have been turned down by the mainstream lenders. If you own your own home, then loans can be agreed for large amounts of up to £70,000-£75,000, although you could borrow as much £100,000 with the right lender, if you have sufficient security or equity in your property. The loans are repaid over longer periods, typically 25-30 years, and are secured against your property, meaning that you may have to use the equity in your home to repay the loan if you are unable to meet the instalment plan.
Bad credit secured loans are well suited to homeowners who have not been able to arrange a personal or unsecured loan, and a remortgage simply doesn’t make sense when you take the interest rate and possible arrangement fees into consideration. Bad credit lenders do not refuse loan applicants purely on the basis of a poor credit history – they will also look at your current circumstances, how your approach to credit has changed since the infringement occurred and also the level of equity and assets you have available to secure the loan against.
However, this type of credit will typically be more expensive than a conventional homeowner’s loan to reflect the extra perceived risk involved with lending to someone with bad credit. You should also remember that a second charge on your property can be a serious commitment – one that your mortgage provider may need to be made aware of – and a lender will want to know your reasons for taking out the loan, what you will be using the money for and how you plan to pay it back, as well as the usual factors such as your income and household budget.
What are bad credit secured loans suitable for?
Where personal or unsecured loans are generally for smaller amounts, perhaps used for a major one-off purchase or project, and are designed to be paid back over a shorter period of time, secured loans are generally agreed for large amounts and are repaid over a longer period (sometimes as long as a mortgage, perhaps 25 years). This can make them suitable for people who have a number of more expensive debts and who want to consolidate them into one manageable, more cost-efficient loan with far simpler repayments.
The reason for this is that interest rates charged on bad credit secured loans are typically lower than those you find applied to guarantor loans, and significantly lower than payday loans, which are known to be incredibly expensive and liable to lead to spiralling costs if not paid back promptly. Secured loans, even with bad credit, can also be cheaper than some credit cards.
However, a bad credit secured loan should be treated with caution and seen as a last resort for many. Not only will your poor credit score lead to you being charged a higher rate of interest, but as it will be secured against your property, your home is potentially also at risk should you not be able to keep up with the repayments.
As the repayment terms are also longer than alternative sources of finance, such as unsecured loans, interest will continue to accrue over time and the loan is likely to cost you more in the long run, even if the repayment amounts are initially smaller than would have been expected for other types of credit.
Before you commit to a bad credit secured loan, be sure to discuss your situation and your plans with a professional financial adviser or a broker with a deep understanding of this type of finance. They could be likely to highlight some aspects of secured loans that you may not have anticipated, or even suggest an alternative path that you hadn’t known was open to you.
What Adverse Credit is Acceptable to Obtain a Secured Loan?
As secured loans are not so widely available, the criteria for obtaining one can be slightly more taxing than that for unsecured credit, and having adverse credit items on your record can make the process all the more challenging. This said, obtaining a secured loan with adverse credit is by no means impossible.
With a number of lenders on the market offering products designed to be suitable for those with poor credit, you can be accepted for a bad credit secured loan whether you’ve had just a few blips on your financial history, or a credit report that highlights some more significant issues. What exact issues are acceptable to individual lenders will vary from one to the other – each will have their own policies when it comes to what they will accept, with some perhaps even specialising in lending to people who have experienced a particular adverse credit problem, such as bankruptcy, in the past.
However, it is not just those with a bad credit score that can struggle to find a lender willing to help them with a secured loan. Those with a non-existent credit score, who might have very rarely taken out any borrowing in the past, if at all, can also experience problems when applying for many types of credit. In the absence of any record or pattern of borrowing, lenders are unable to tell what the applicant’s approach to credit will be, and if they are a high risk or not. Without enough information to make a decision, the lender will often turn the applicant down.
When something as minor as missing a mobile phone payment or being late with your utility bills can damage your credit score enough for the mainstream lenders to think twice about lending to you, then your best option for obtaining a secured loan with bad credit will be one of the many niche-market lenders available through professional brokers. Most bad credit events will be accepted by specialist bad credit loan providers, including missing repayments on credit cards, personal loans and mortgages.
It is usually a matter of knowing exactly which one to approach, and framing your application to make a decision as straightforward as possible. To find out more about how we can help you with this, please do get in touch with our expert team today to arrange a free, no-obligation initial consultation.
Are secured loans the best option for people with bad credit?
This really depends on the amount of money you need and the period of time you’d like to repay the loan. As a homeowner with a history of bad credit, you are more likely to be accepted for a secured loan rather than a personal loan, which would be the cheaper option.
One of the benefits of a secured loan is its flexibility:
- The repayment term can be longer
- You can borrow more than a personal loan
- The eligibility criteria is less rigorous than a personal loan
However, the reason for this flexibility is due to the fact that your property is being used as security against the loan, so the level of risk for the lender is reduced. You should always remember that losing your home is a real possibility, so only take out a loan you could comfortably afford to repay, even if interest rates were to rise.
How much does a bad credit secured loan cost?
There is no such thing as a ‘one size fits all’ bad credit secured loan, so the interest you pay will depend on your personal circumstances, such as the amount you want to borrow, the repayment period and the severity of your credit problems. If you want to keep the cost down, repaying the loan over a shorter period of time can result in reduced interest charges. However, this will increase the level of your monthly repayments.
Bad Credit Secured Loan Brokers
Secured loans allow homeowners to use equity from the properties for a variety of purposes. However, sometimes having a bad credit history can make this process a bit more complicated. Using our team of professional secured loan brokers can make the procedure a lot more straightforward.
- We consider all clients with bad credit scores
- Soft footprint credit checks
- We have an in-house team of secured loan brokers
- Just Mortgage Brokers can make the procedure a lot more straightforward
Why Choose Us
We have the resources in-house, to ensure that we search for the right lenders with the best rates, with plans created specially to assist with those with bad credit scorings. Secured loans are designed for property owners to make the most of the assets that they already have and that is exactly what we aim to do.
How can we help?
If you have been refused a loan by a mainstream lender in the past, all is not lost. At Just Mortgage brokers, our experienced team will discuss your financial circumstances in detail, before canvassing a network of specialist lenders to find you the right deal. We will also help you explore more appropriate sources of finance if alternative options exist.
For more information, please get in touch with one of our brokers today.