We have all seen a number of changes in secured loans, mortgages and remortgages in the last few years. This is understandable at times of economic chaos. The underwriting of these loans became so much less lax than they used to be when almost anyone with a pulse and a wage slip could almost always obtain some kind of loan from lenders like Welcome Finance even if they were tenants who did not own their own property. Mortgages, even for first time home buyers, were available at 100% of equity, meaning that people without savings of any kind could become homeowners. People who were already homeowners and wanted to move to another home, either to buy a better and more expensive property or those moving for work reasons were able to obtain mortgages at 25% more than the property was worth.This meant that someone could buy a property worth £200,0000 and have a mortgage of £250,000 secured on it. At that point property prices were certainly rising at a very fast pace, but never the less no one has a cast iron guarantee of how long this could last, and that is where the problem begins. It was exactly the same with remortgages which are only a mortgage arranged on the same property but with a new lender supplying the funds that prior to the recession were available at 125% of the property value. Some homeowners, then as now, arrange a remortgage to obtain a better interest rate or to obtain more money to use for most purposes including debt consolidation. Secured loans that are homeowner loans based on the equity of the house also had very relaxed criteria, and were also available at up to 125% LTV In addition to the slack equity margins for secured loans, mortgages and remortgages, many of these loans were available on self declarations of income which meant that the applicant simply declared their own earnings without officially proving what their income really was. The credit crunch put paid to these practices, and for some time the best mortgage available to first time buyers was 75%, which meant that young people in general were forced to rent, as many did not have a 25% deposit. Now some lenders are granting 90% mortgages to first time buyers. During the credit crisis mortgage rates were low but the same cannot be said of secured loans.9% before the recession to at least 9% for status borrowers, until a couple of weeks ago when Link Loans introduced the lowest secured loan now available in the market with an interest rate of 7.9% which is also good news for people wanting to save money by using these low rate loans as consolidation loans. It is to be hoped that this is only the beginning of further improvements, and that more such changes will be witnessed sooner rather than later.
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