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Is it time to get tied up with a secured loan?

Payday loans: Beware!
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The first half of 2013 has shown us that lenders are starting to relax their strict lending criteria, offering higher loans and revamping their product ranges. This year they’re offering credit-hungry consumers the best packages since the credit crunch began.

A secured loan offers an alternative option to remortgaging and gives brokers more choice to source products and complete deals.

What should you look out for?

Taking out any kind of loan, big or small, should be thought through very carefully. The idea of a high percentage LTV loan might be very appealing but try to resist seeing it as a quick fix and consider all your options before taking on a big financial commitment. With a growing family, you can try to plan ahead but it’s best to expect the unexpected and leave yourself a little room to manoeuvre financially if possible.

Lenders experienced problems in the past with high LTV loans, with reduced service levels and even running out of funding due to over subscription! With this in mind, it’s especially important not to rush into this.

Firstly

…you should make sure the lender you choose has a proven track record. How successful have they been in the period of time since the higher LTV rates were reintroduced? How did they perform last time around? These new offers might be all singing and all dancing but if the lenders can’t maintain the service levels to go with them, they might run into problems. In theory, you’d like to think a lender who ran into problems last time would have learned from their mistakes but the best thing is to do your research. There are quite few reputable sources online who can offer good advice to help you get started.

Are you getting the best rates?

Whether it’s the latest games console or an amazing new gadget, popular products create demand and subsequently, competition is high.

This high popularity can have its pros and its cons. If competition is high, lenders will be forced to offer better rates in order to stay in the running. A lender who can’t keep up with the best rates is likely to fall behind. This is potentially great news for the consumer because you’re likely to get a better deal than when the high percentage LTV loans were first reintroduced. But if competition gets very fierce, in the long run, lenders may start offering deals that they can’t realistically maintain.

So shop around before you take on a loan. But make sure you think about the long term. A loan that offers fantastic rates for the first few years (just to keep up with the competition) could become a painful financial burden once the honeymoon period is over! On the other hand, if your children will be in school instead of nursery by the time the introductory rates expire, maybe your budget will allow it.

Getting the balance right

You want your lender to offer you a good deal but you need them to be able to maintain it. And don’t go with a lender because of their fantastic introductory rates if you can’t afford the repayments in the long term. Make sure you’re prepared to take on this commitment. When will the loan be repaid and how much interest will you have paid by the end – should you choose to try saving some money first then think about borrowing later? Is it realistic for your budget or your future plans i.e., your growing family and their evolving needs.

In this brave new world of high percentage LTV loans, it’s all about striking the right balance.

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About Celyn Parry

About Celyn Parry

Celyn Parry has 12 years experience working with a leading children’s retailer but is now focusing on her passion for writing. With many years spent on the shop floor listening to parents, she prides herself on creating down to earth articles with a dash of humour and personal insight. As Step-Mum to adorable chatterbox Max, it’s a bit of a juggling act but it certainly keeps things interesting!

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