Secured lender Equifinance Limited.

by Mark Johnston

Secured lender Equifinance Limited.

The banking crisis has driven previously established firms out of the secured lending market altogether or caused them to dramatically reduce their exposure to new lending.

This has therefore left many consumers with significantly fewer choices in this particular area and this in turn has created an opportunity for niche lending.

However, according to recent research secured loan volumes are expected to rise.

Secured loans are a tricky market and this market is full of pitfalls for the novice as there are some lenders who are little more than loan sharks.

These loans are often called home owner loans and are secured against a residential property as a second charge, the existing mortgage is the first charge.

The latest secured loan index shows that the industry has enjoyed the best January since 2009, with £30.1 million lent to home owners.

In February last year, Equifinance Limited, launched in to the secured loan market and offered up to 75 per cent loan to value (LTV)for customers with impaired credit ratings, unlimited past mortgage arrears, county court judgements (CCJ), defaults and unsecured credit arrears.

Matt Tristram, director of Loans Warehouse, says “the secured loans market has for some time offered clients with poor credit a way of borrowing money not available through remortgaging, but this product from Equifinance offers something extra”.

This particular lender does not use credit scoring to assess loan applications, instead they look at a borrowers individual circumstances as a whole. The lender believes that this then enables them to take a flexible approach when making a decision to lend.

Recently the secured loan lender Equifinance has launched a new lender subsidiary, Equifinance Plus, which lends to credit impaired borrowers.

Equifinance Plus aims to accommodate  borrowers who have had mortgage arrears, defaults and county court judgements (CCJ) in the last 6 months of their financial history, with loan to values (LTV) of up to 100 per cent.

The annual rate of interest will be 39 per cent for borrowers with a clean credit history and 48 per cent for those borrowers with recent impairments on their record.

All loans are available for between 12 months and 60 monthsand the amounts range from between £1,500 and £5,000.

Although the amount that can be lent depends on the value of the property and how much the home owner already owes on their original mortgage.

Some industry experts believe that at every level of this industry continues to make improvements to its offering.

It appears that currently secured loan lenders are competing to offer lower rates and are also coming up with innovative products.

Ray Boulger, senior technical manager at John Charcol, said “second charge lenders have been much more proactive than the vast majority of first charge lenders when it comes to criteria changes, specifically in terms of extending the maximum loan to values”.

However, many experts have warned borrowers that as these loans are secured against property it is imperative that borrowers keep up with their repayments, otherwise their property could be at risk of repossession.

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