People considering applying for a secured loan or a remortgage are often not certain if they are eligible to apply.
Remortgages and secured loans are both homeowner loans and they are secured, meaning that the number one qualification for remortgages and secured loans is to have enough equity in the property forming the security for the remortgage or secured loan.
Equity is the difference between the mortgage balance and the value of a property, and an example of this is if a property is valued at 490,000 and the mortgage on the property is 360,000, the equity would stand at 130,000.
This in no way means that homeowners could achieve a secured loan of 90,000 or a remortgage of 280,000, as there no longer any remortgages and secured loans of 100% or even 125% as there was in the past.
If a remortgage is the preferred homeowner loan , the maximum LTV now is 90% and that is from only a few lenders, as most of them want to limit the loan to value to 85%
When considering applying for secured loans the maximum LTV has only in the last few been increased to 85% for employed applicants and 75% for those who are self employed.
In the same way that equity is required , so too is sufficient earnings. Mortgage providers normally use an income multiplier which varies from one lender to the other but the rule of thumb is that it is from a little more than three times an applicants earnings to as much as five times.
Secured loan lenders have a different way of assessing income , with the majority taking 40% of gross income to cover all monetary out lays like the mortgage payment, the secured loan being organized , and the monthly payment to any personal loans, credit cards, etc, that are not being cleared with the secured loan.
Many homeowners, when they take out secured loans or remortgages, arrange debt consolidation with some of the funds, and therefore other debts can be ignored into the income calculation.
Homeowners with enough equity and income should not delay applying for these all purpose loans..
Want to find out more about secured loans, then visit Champion Finance’s site on how to choose the best remortgages for your needs.
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