Britain’s secured borrowing market has seen significant and on-going growth for several consecutive years. Particularly in the more specialist sectors of the secured loan arena, application volumes are peaking and showing no signs of abating.
But what exactly is fueling this UK-wide secured loan increase? What’s behind the rise of secured loans in both private and business borrowing circles alike?
Greater availability
For one thing, brokers and lenders alike are gradually beginning to acknowledge the importance of diversifying their portfolios.
Traditionally, secured loans have been seen as something of a last resort. In addition, credit scores have been considered the be-all and end-all by far too many lenders. The public has been crying out for more flexible and accessible funding solutions, which, on the high street at least, have been thin on the ground at best.
Today, there’s a growing network of specialist lenders across the UK working hard to turn things around. From short-term bridging loans to subprime mortgages to development finance, the availability of diverse and dynamic secured lending products is at an all-time high.
The more difficult it becomes to qualify for a traditional High Street loan, the greater the number of applicants turning to the UK’s specialist lending sector.
Regulatory changes
Of course, the supervision and control of the Financial Conduct Authority have also renewed confidence in a sector that was once viewed with scrutiny. Taking charge of the regulation of the entire secured loan sector, the FCA is committed to the implementation of ongoing improvements for the benefit of the borrower.
The result of this is a secured loan market that’s significantly more transparent than it has ever been. Interest rates are plummeting, irresponsible lenders are being driven out of business, and the market is booming as a result.
The flexibility of secured loans
One of the most attractive characteristics of a secured loan is the fact that it can be used for just about anything. Traditionally, high-street lenders have offered a relatively limited portfolio of secured loans with very specific purposes in mind. Mortgages are a prime example. available exclusively for property purchases and subject to strict terms and conditions.
Even with all the collateral in the world and an enviable financial position, a poor credit history could still see applications rejected.
By contrast, the UK’s specialist lending sector focuses heavily on flexibility and accessibility. In terms of limitations, there aren’t any secured loans available to cover absolutely any investment or outgoing. Bridging loans in particular provide limitless security, which can be used for any legal purpose whatsoever.
In addition, new-generation secured loans are routinely issued with no credit checks or proof of income required. The only proviso is the provision of sufficient collateral to cover the cost of the loan; the rest is of little consequence.
For obvious reasons, this has come as a welcome lifeline for millions of businesses and households affected by imperfect credit. Specialist secured loan applications are considered by way of individual merit and are not simply counted out of the running based on credit issues alone.
Low interest rates, minimal borrowing costs
If all this wasn’t enough, there’s the added appeal of the lowest possible interest rates and unbeatable borrowing costs. As secured loans are issued against the value of the applicant’s property or assets, they’re considered comparatively low-risk credit facilities. The lower the risk on the part of the lender, the lower the resulting costs for the borrower.
Hence, in many instances where both secured and unsecured loan options are available, it can prove exponentially more cost-effective to go with the former. particularly given the speed and simplicity with which a secured loan can be arranged.
Accessing the best secured loan deals in the UK often means looking beyond the High Street; consult with an independent broker for more information.