Secured loan with adverse credit
Secured loans are typically easier to get than a remortgage and are generally more forgiving regards to bad credit and how much they will allow you to borrow against the property with bad credit. Loans for bad credit can help people repair their credit rating and gain better borrowing terms in the future which could save thousands of pounds in the long term.
You can apply for a secured loan with adverse credit up to 75% of the property value, 75% LTV
There are currently loans available for people with adverse credit which will allow what are called unlimited adverse up to 50% loan to value (LTV).
What is unlimited adverse
By unlimited adverse credit, it means more than a few missed credit card payments or defaults.
Unlimited adverse means that the lender will allow you to borrow regardless of your bad credit.
- Missed Payments
- Low Credit Score
- Bad Credit History
- Mortgage Arrears (max 2)
- Defaults
- CCJ
A lender offering unlimited adverse (or unlimited bad credit terms) will allow you to have any of the above and still be able to borrow money secured on your property.
Care must obviously be taken to ensure any new secured loan is going to be of benefit and the repayments are affordable but for people wanting to consolidate bad debt and repay their bad credit to benefit from better future credit terms this is good news.
People who have a mortgage for example can get a loan for bad credit consolidation and benefit from much better future mortgage rates than if they left their bad debts, although a loan obviously has costs attached to them, the long term saving that can be made often outweigh the initial costs and loss of equity a secured loan would incur, especially in the times of the credit crunch when mortgage lenders are being very cautious about borrowing to people wit bad credit.
What restrictions are in place for unlimited adverse?
Unlimited adverse credit deals do come with a set criteria for borrowers to meet before they will be accepted by the lender, whilst as the name suggests - a potential clients credit problems may not be a major problem, even if they currently have mortgage arrears or previous missed mortgage payments - they could also be with a bad credit mortgage lender, neither of which should cause any problems. There is one very distinct area that the client would have to meet before being accepted, other than the obvious ones such as being able to afford the loan and having some form of regular earnings such as employed or self employed the main obstacle to overcome is the LTV.
Maximum 50% LTV
Secured loan lenders who offer unlimited bad credit deals will restrict their borrowing to a maximum of 50% loan to value, that means they will only borrow up to 50% of the property value so if your property value is £200,000 and your existing mortgage is £80,000, you could borrow another £20,000 (a total of 50% of the property value) subject to affordability.
This is not necessarily a bad thing though as it will ensure that their is still enough equity in a property to enable a remortgage further down the line once the borrower has repaid all their bad debts with the secured loan. They will also benefit from much better mortgage terms, fees and interest rates as a result of clearing their bad debt.
