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Secured Loan applications
When secured finance is being raised it is often the case that people can be confused about the processes involved when applying for a secured loan. We thought it would be a good idea to have a jargon free, none technical guide which will hopefully allow you to get more familiar with the secured loan process, as we are keeping it jargon free it is not a blow by blow account of how a secured loan is underwritten but it should improve your 
knowledge and understanding of what goes on when you apply for a secured loan - we have done the research for you to show how a secured loan is actually put in place, just so you will have a better understanding of how they work.
What is a secured loan?
A secured loan is pretty much the same as any other loan, you agree to borrow funds over a set period of time which will be paid back at agreed intervals (usually monthly) over that period. The key difference is a property (usually your home) is used as security for the loan which means your home could be at risk if you are unable to repay the loan as laid out by the secured loan agreement.
How does a lender set up a secured loan?
Before we explain how a secured loan is set up there are a number of routes to applying for a secured loan, you could use a broker, go to your own bank or use a secured loan packager - for the sake of simplicity we will use the term lender to cover all these various routes when applying for a secured loan.
Lets assume you have found the loan you want and are happy with the repayments etc, the steps for the lender (and we will keep this simple and jargon free) are as follow.
They review your application and credit file to ensure you meet their lending criteria and, if appropriate to the lender they will check your credit score. Along with this they will check any documentation you sent in with the paperwork such as proof of address, wage slips and identification (such as a passport)
Secured Loan valuations are fairly straightforward
If all the documentation sent in turns out alright and they are happy with everything they will then do a valuation, from the research we have done there seems to be some confusion as to what sort of valuation a secured loan lender will carry out - lets remember that if you are applying for secured loan on a property you would own the property, so the only valuation needed would be to satisfy the lender that the property is worth what you are stating its worth. With the technology available to lenders today it is unlikely anyone would actually come to your house for a secured loan valuation they will not normally do what most people consider to be a valuation (walk round, taking notes) - for secured loans they will usually do what's called a desktop valuation, that is, the lender will have access to online or in house computer software that will tell them the value or approximate value of your property without them leaving their desk.
This saves time and money for both yourself and the lender but on occasion they may also carry out what's called a drive by valuation, this form of property valuation simply means a valuer will drive past your property to confirm it is as stated in the application - it would be unlikely that a valuer would actually turn up at your door and carry out an on site valuation for a secured loan unless the amounts being borrowed were unusually high.
The secured loan lender needs permission
The secured loan lender will also need to apply for permission from your existing mortgage lender for their secured loan to site 'behind' the mortgage on the deeds. The reason many people call secured loans a second mortgage is that it sits behind you first mortgage. Your main mortgage company will be classed as the first (or main) mortgage and your secured loan would be classed as your second mortgage.
If your first charge mortgage lender agrees that they are happy for you to have a second mortgage, or second charge to 'sit' behind them, and everything above got the ok then you should have no problems getting a secured loan approved. Your existing mortgage company will decide whether they will allow a second charge or secured loan on the property based mainly on your existing mortgage payment history with them, if you have never missed a payment and their is sufficient equity in the property its likely they will agree, however your fist mortgage company may also have other criteria to meet which may vary from lender to lender but your payment history and equity will be important.
The whole process from start to finish can take as little as two weeks but in general we found 3 to 4 weeks to be the norm.
During this process you will have a number of cooling off periods where the secured loan lender will not be able to contact you - this is to enable you the time to evaluate the proposed loan on offer and make sure it is right for you.
You will notice above that there were no mention of legal fees. A secured loan does not need any conveyancing (transferring of mortgage deeds from one lender or owner to another) and as such there is no legal work done - at least none requiring a licensed conveyancer to carry out which obviously speeds up the process and helps reduce costs for yourself.
