Secured loans are loans which you take out using your house for collateral. But with the recent credit crunch, and hints that housing market is going stabilise at best and crash at worse, less lenders are willing to offer any kind of loan. The first hit happened to the mortgage sector, with products previously available in the market place such as 125% mortgages suddenly disappearing fast. Even 90% mortgages are nowadays hard to come by, meaning large deposits and high wages are your best bet of being offered a reasonable deal.



If you don't have a large deposit and wages to match, higher lending charges are more than likely to be imposed. It seems a little counter intuitive to charge more to people who have less, especially if banks actually want to avoid people defaulting on payments because they can not afford them. The screening process for mortgage applications has been tightened up considerably and many lenders are requesting brokers to obtain more and more information before they will consider an application. Statistics reveal that first time buyers are now putting down an average house deposit of £15,000 pounds, which most have had to save themselves rather than raiding the bank of mum and dad. However once every last penny has been scraped together to make a reasonable deposit, there is no much left over it times get tough.

Secured loans maybe an option to increase household cash flow if mortgage rates go up, but your wages do not. They tend to have lower rates than personal unsecured loans and can be arranged for higher amounts over longer periods of time. Although lenders have started to impose stricter eligibility criteria for secured loans they could be easier to obtain than a new mortgage. The only problem that might be encountered is the choice of providers.

Over recent months there has been a spate of loan companies withdrawing from the market. The latest was Picture Loans, who made all their shiny new adverts and then decided they didn't really want to sell that many more loans. The high risk factor has hit everybody hard and every financial institute in the market place wants to reduce the number of consumers in this category who have their products. But secured loans are still a thriving market and good deals can be found if you are prepared to look hard enough.

Be careful though, as an advertised ‘low loan interest rate' may actually be masquerading as a high rate in disguise. If you see a cracking loan rate being advertised, you may call up to find that this is the typical rate and does not apply to yourself. The rules around advertising a typical rate is that it must be the rate that is given to two thirds of all customers. Again it seems that if you have a good credit score and high wages you are more likely to be offered the typical rate and if not you will be offered a more expensive version. Unfortunately it looks like we are not over the worst yet, but there is hope that the economy will soon be back on track.