Furloughed by your employer

When the government set out its approach to dealing with the pandemic, it knew it was facing the potential of mass unemployment due to the lockdown requirements that otherwise would have been made redundant or laid off.

Although the furlough scheme has undoubtedly been a saviour for many families, it has left a sting in the tail that many people are not yet aware of but will have to face when they apply to remortgage or take out a new mortgage.  Many of the high street lenders are not accepting that furloughed people are still fully employed and this is stopping many furloughed people being able to obtain a mortgage.

People in this situation who are wanting to remortgage to raise capital, may not be able to do so until they can show that they are no longer furloughed and that their job is no longer under threat in the long term.

If you find yourself in this situation and require capital now, provided you have sufficient equity in your property, a secured loan may provide a solution as the lending criteria is much more lenient.

If you have taken a mortgage payment holidays

In addition to the furlough scheme, the government also allowed people who were struggling financially to take payment holidays from their mortgage repayments. This applied to all mortgage holders both employed and self employed and a very large number of people took advantage of this.

What many people don’t yet know is that the main high street lenders are treating these payment holidays as being missed payments meaning that people in this situation who wish to remortgage or move home are finding they no longer meet the lenders criteria for a mortgage. This is potentially far more damaging than the impact the furlough restrictions.  If lenders do not review this, people could have severe difficulty in securing a mortgage for a long time to come.

For obvious reasons a secured loan cannot take the place of a first charge mortgage but if you were remortgaging to raise additional capital, what a secured loan can do, providing that you have sufficient equity in your property, is allow you to borrow the capital that you require now.

Changes to your credit rating

It can be quite common for people who have held their mortgage for many years, and have always been able to remortgage to obtain better rates, suddenly finding that a recent difficulty has affected their credit rating meaning that remortgaging on advantageous terms is no longer an option.

If the purpose of remortgaging was to raise capital for some special event in your life, then provided you have sufficient equity in your property, a secured loan may provide a solution. This is because secured loan lenders are much less concerned about credit scoring than high street banks, as they have the security of knowing that the loan is secured by the property.

In this scenario, interest rates charged are likely to be a bit higher than on your current mortgage but you can get the money and your existing mortgage remains secure.

If you find yourself in this situation and require capital now, provided you have sufficient equity in your property, a secured loan may provide a solution.

Credit Card Debt

Spiraling credit card debt has now become the reason behind many UK families finding themselves in financial difficulty. With interest rate charges on these debts reaching an Apr of up to 25%, it is easy to see the problem. It is not uncommon for families to have run up debts on these cards to £50,000 and more.

Finding a way of removing these debts is usually the number one priority for families seeking to improve their financial situation. With interest rates on mortgages at an all time low, remortgaging with your existing lender to raise extra cash is often the first consideration but there are many reasons why this may not be possible:

• Lender may not be prepared to accept you for this purpose.
• Adding this amount to your existing loan may take you out with the lenders lending criteria.
• Adding to your existing loan where you have a long repayment term may not be right for you and interest rates may rise over that time.

If you find yourself in this situation and you have sufficient equity in your property, using a secured loan on a repayment term to suit you could be an option.

In this scenario, interest rates charged are likely to be a bit higher than on your current mortgage but this will be far less than you are paying on your credit card loan and you have the knowledge that the loan is being repaid over the term as opposed to the spiraling debt burden on your credit cards.

Warning, If you use this method to cancel your credit card debt, you should consider only keeping one card with a low loan value for essential use only otherwise you risk repeating your mistake.

Refurbishing Your Property

You now feel that your property is now looking tired and would benefit from a major refurbishment but you have found that remortgaging with your existing lender for the increased amount will result in having to accept a new mortgage product on much less advantageous terms.

You have looked into this and have concluded that the extra cost brought on by the new terms against the higher loan amount is proving to be beyond your comfort level and that you need a different solution.

Providing that you have sufficient equity in your property, using a secured loan on a repayment term much shorter than the term of your main mortgage could be an option for you and you would benefit through being able to retain your main mortgage on its existing terms.

Life after Retirement

You are approaching retirement and have gradually reduced your mortgage on your property to a fairly low loan to value level or have paid off your mortgage in full.

You may now find yourself in the position that you are effectively cash rich in property but have limited funds in the bank and your expected income from pensions etc., is a little tight to let you do the things that you need, such as purchasing a car or having a special holiday.

You have concluded that using some of the equity in your property as security, would let you raise capital to do the things that you would like to do but for various reasons, remortgaging or taking out an equity release package is not an option for you or is not something that you want to consider.

Due to the more relaxed lending criteria on secured loans and the willingness of these lenders to lend to people well into their retirement years, funding your needs through a series of lower value loans that are repaid over relatively short terms  could let you achieve your aims.

Taking this route lets you achieve your lifestyle aims while always budgeting  within your means. You also have the knowledge that you are retaining the full equity that you have build up in your property to secure your future needs or to leave to your family.