Secured v Unsecured??

bony23

hi folks - anyone out there who can give me a hand with deciding on what type of loan to get please

i have over £150k equity in my house, and until recently my credit file been perfect. i have recently had a default registered against my name which i am currently in the process of sorting out (its only a small amount)

i am looking to do some improvements on my property and estimate will need 20k to complete.

my question is would i get an unsecured loan for this amount having only 1 default on my file, all my other accounts are up to date or settled. not a lot of outgoings really, small mortgage, small car payment. i work full time.

any advise welcome, i do not want to apply for an unsecured loan get rejected and this has an uneccesary bad relflection on my credit account. so the more research i do before actually applying the greater my chance of finding the right lender (and the right APR). looking to take the loan over 10 years initially but will reduce by half within 18 months (i know they can only charge me a max of 2 months interest which i roughly calculate to be £100-£120)

any loan advisors, brokers, people with relevant experience in same postion out there??

many thanks for taking the time to read my post and i look forward to heraing some sensible comments and suggestions

cheers:o

bony23

anyone????????????

epsilondraconis

I've no experience and am not qualified; however I'll do my best.

My understanding is that one default could definitely count against you. As a result of this and considering you have £150k equity in your property, I would be mindful to approach your current mortgage lender and extend your mortgage by the required £20k. Also, I would think the rate you get would be more favourable.

Are you able to make overpayments on your current mortgage?

~Brock~

bony23 wrote: »

i have recently had a default registered against my name

That one highlighted word is likely to be the reason why most unsecured lenders would turn you down. Regardless of the reason for the default, the fact that it has only just happened would be used by most scoring systems as a reason to suspect that you are currently having difficulties.

I agree with the other poster - in your situation a secured loan is the most likely solution, but look out for sky high arrangement fees and prohibitive settlement clauses. Your present mortgage provider would definitely be the first place to start.

bony23

thanks to all that replied. i was conscious of the default just happening too, so did suspect it would have to be secured, my mortgage is with abbey who i hear are very strict on loans, not sure if this is the case with secured loans.

as aforementioned want to make sure that credit file not damaged further by mutliple applications.

CLAPTON

multiple applications will have a very small effect compared to a default
be very careful about taking out a secured loan ... check out the fees, early repayment costs and ensure its got a fixed rate APR.

adtheblue

There are not many secured lenders left these days and those that are don't offer fixed rates. Totally agree with Clapton, to watch out for arrangement/lender fees and those wonderful looking 'typical' APR's.

TheLendingWizard.com will tell you the actual APR and the total amount of fees online before you apply.

Good Luck

Dekazer

If you have been a good customer with your bank you may find that they have pre-approved you for a loan. They may even maintain that despite a recent default.

Asking whether they have pre-approved you for any personal (unsecured) finance won't register as an application. Can't hurt to ask!