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Other Funding paths to consider

Thursday, January 19, 2017 11:26:00 AM


Did you know that there are other borrowing options out there which may be more appropriate for certain circumstances, such as Secured Loans, and Bridging Loans.


SECURED LOANS...
Some people may have had enough of treading water for the last few years and could now want to undertake some of the bigger tasks around the home.  However, this might not require sizeable funds to make remortgaging a worthwhile (or desirable) option.

This is where a secured loan might help.  It is designed for homeowners who can use part of the equity in their property to obtain a loan that may sit as a second charge on top of their mortgage (which would probably be with a different lender).

Secured loans may be an option for the following situations:

  • A large number of mortgage borrowers are deemed mortgage prisoners', who may find it difficult to remortgage (particularly if they want to increase the amount borrowed).
  • Some mortgage borrowers may be sitting on an interest-only product, where remortgaging could require them to revert to a standard repayment loan (which may cost them more each month, even if they secure a better interest rate deal, as part of the capital needs to be paid off too).
  • Other mortgage borrowers may simply not want to jeopardise the current deal they're sitting on.
  • Or some may want to consolidate their debts.  Although, taking out a longer term loan such as this may mean that the borrower ends up paying more in interest payments, than if they paid off any credit or storecard amounts over a shorter term.

As the interest rate on a secured loan is generally higher than an average mortgage one, talk to us and we can help assess if it's a suitable option for you.

BRIDGING LOANS
These are designed to be a short-term measure that can help you through an initial period, until alternative financing can be put in place.  

Individuals (and businesses) often turn to bridging when they require short-term funds swiftly, and the industry can be highly responsive to those needs.  These funds could enable borrowers to secure a property (at auction perhaps), or make enhancements to their current property, while waiting for a loan from their mortgage lender or other source to come through.

Bridging loans will not suit everyone and can be a more expensive form of borrowing, and specialist finance such as this is certainly NOT the right product for those who are in any form of financial distress.  On the contrary, it's designed for people who have some element of wealth through property assets and who wish to use a bridging loan to quickly and easily extract liquidity from those assets.

The benefit is that it could, for example, open up the possibility of snapping up a property at a time that suits you - without losing out because the sale of your existing home may be part of a lengthy chain.  You'd obviously need to do the maths, to establish if the cost of a bridging loan is outweighed by the time, flexibility and possible financial benefits it may deliver.

The Financial Conduct Authority does not regulate some Bridging Loans.

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.


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