Secured Loan Calculator

Based on the Video Transcript

If you’re reading this page or watching this video, it’s probably because you want to know how a secured loan calculator works and how it can help you. So, good news and bad news.

The bad news is they don’t really exist in the sense that they can tell you exactly what you can borrow. Nor can they tell you how much it’s exactly going to cost because there are so many variables. I’ll explain to you what I mean by that.

For a calculator to be accurate, it would need to work out the loan to value that you’re going to work at, so what your property is worth, how much you’re on your existing mortgage, how much you want to borrow.

It would have to work out the term that you want to take the loan over, and you could put this information in, but then the key thing is with a secured loan affordability comes into it. So what’s the affordability calculation which lend is likely to meet that calculation for you?

Then you’ve got your credit, and it’s not as simple as just a credit score because some lenders credit score so they won’t give you a quote until they’ve done a credit score. Others don’t credit score, they do it with manual underwriting.

So you need a credit search to be able to look at that which is not a score, it’s a detail with everything on it and that has to be read manually.

Then you’ve got the main factor that comes into it which is advice. So even if you could get some numbers, and by the way, we do have a calculator on our website which tries to get to the right sort of approximations for you, so do try that on the Promise Money website, but even if you could work out those numbers, then comes the rest of the equation which is, well, what is it that you’re looking to do, and is that a good idea, and is there a different way of doing it, and all of that feeds into advice.

Whenever you’re taking out a secured loan, you do need to get advice. It’s a requirement that you get advice, and so that’s really important to do.

The good news is you can get advice. You can get it, you can get a quote without costing you a penny where somebody’s looked at it, looked at the underwriting criteria, looked at what’s important to you, made sure it’s appropriate, giving you what worked at it if it’s affordable, and essentially has really passed a lender to see that it’s all going to happen.

So what you’d like to get from a secured loan calculator, you’re going to get from an advisor, and getting a quote is free. At that point, you can then decide whether you want to go ahead.

But let me just talk very briefly about some considerations which might help if you’re thinking of a secured loan. When it might be useful. Generally, secured loans for capital raising, it’s not like a mortgage, you’re buying a house, you’re going to use a secured loan because you want to raise some cash.

It could be a secure loan on your property on your home where you live. It could be secured on a buy to let property, but you’re raising an extra chunk of cash.

And when you’re doing that, you’ve got an unsecured loan as an option, you’ve probably already explored that, but you might have a remortgaging option because a secured loan is a second charge loan, so it sits behind your mortgage.

You’ve got your mortgage with your length with your mortgage lender and you take a secured loan and that sits behind that. So when you sell your property, you pay off your mortgage, then you pay off your secured loan. That’s that, that very, very simple terms what it does.

So really, you want to be thinking about, do I want to remortgage, or do I want a secured loan? And again, when you go to an advisor, be careful here because if you apply on these online comparison sites, they basically sell your leads onto another specialist. And generally, they’ll go to a company that just looks at secured loans. They won’t look at the remortgage for you. They’ll say, “We’re going to give you our best-secured loan.” Now, the problem with that is a proper advisor is going to say, “I’m going to check what’s available for a remortgage and a secured, and I’m going to tell you what’s the most appropriate. I’m going to cover the whole market and all the options for you.” Whereas these specialists, they just say, “Well, we’ll give you the best that we’ve got, but we’re going to ignore the rest of this over here.” So, and that’s fine as long as I tell you that problem for you is that you’re only getting half the job done, you don’t get the full advice.

If you’re going through if you’re thinking remotely, just secured loan, that’s what your advisor should be thinking too. And broadly, if you’re looking at a remortgage, it’s going to be cheaper for you because as long as you can get a really good rate on the remortgage, better than you’ve got now, or best you’re going to get in a secured loan, but often you can’t. Because let’s say you’ve remortgaged some time ago, you’re on a fixed rate, you’re tied in, and if you break that mortgage, you’re going to have higher Redemption charges. So maybe try a secured loan. Let’s imagine you’ve got a remortgage rate at the moment, but you changed jobs recently, and if you were to go with your existing mortgage lender or another mortgage lender, you might not be able to get as good a rate as you could as you’ve got at the moment. Think of a secured loan. You might have had some credit issues recently, so when you took your mortgage out, your credit was great, you’ve only got a couple of blips now, nothing major, nothing serious. So, there are lenders that might do it for you, but they’re probably a bit more specialist, they’ll charge a higher rate than your current mortgage. There’s no point moving from your current mortgage, which is here, and moving all of it up to a higher rate. Keep the mortgage at the lower rate and take a secured loan at a higher rate, and hopefully that’ll work cheaper overall. And that’s why it’s important that you go to a broker is going to do both because he’s going to say, “Right, we can either do keep your mortgage and do a secured loan, and the overall cost is going to be X, or we can remortgage you and move it all up to here, and the overall cost is going to be why,” and option A or option B, one will be better than the other. And that’s his job to advise you on that.

So that’s a scenario where you probably would qualify for a remortgage, but it might not be the most suitable option for you. Another one could be loan to value. You might have a mortgage and that mortgage is at a rate because you’ve stayed within a certain loan to value. You now need another twenty-thirty thousand pounds that’s going to take you to a higher loan to value. All of a sudden, going up the loan to value band, the rate of the whole mortgage goes up. Keep the mortgage the same, take a secured loan at the high loan to value, and it’s a comparison your advisor has to work out all of that for you. I told you it wasn’t simple.

But then there are other circumstances where you might not be able to get a remortgage, and that’s quite common because secured loan lenders are much more flexible than many of the mortgage lenders, especially the High Street. So you might not even be able to get a remortgage. Examples could be you’ve got heavy adverse credit, you’ve got a really pants credit history. You might be coming out of a bankruptcy; you might have arrears, you might have CCJs, or you might just have so many missed payments or other credit that the mortgage market is not interested in, but those secured loan lenders who will do that, so that’s good.

It could be the income type, how you’re paid. It could be the mortgage market can’t cater for you, but some of the secured loan lenders can. Debt consolidation secured loans are great for debt consolidation compared to mortgages because a lot of mortgage lenders don’t like doing debt consolidation. Secured lenders do, so that’s good too. Loan purpose again might be a bit more flexibility around that, so there are lots of reasons why a secured loan might be the only option for you because a mortgage can’t do or a secured loan might be a better option because remortgaging and changing the rate on your mortgage might not be the best solution for you. Hence where an advisor comes in.

I can’t tell you what your repayments are going to be because there’s so much that goes into it, and I hope that now helps you realize you know what there’s no point going onto a calculator to see what motor payment is going to be because there are so many factors that are unknown that you don’t know at this stage. If you’re really itching to try a calculator like I say, we’ve got one on our website, go and have a play with that. We’ll try and get as close with some indicative quotes as we can for you, but really what you need to do is speak to an advisor. So if you want to do that, do get in touch, and in the meantime, please check out our YouTube channel, Promise Money YouTube. Lots of videos on there about secured loans, about debt consolidation, and all sorts of other products as well, mortgages, bridging, there’s loads on there for you. Go and have a play in that and just pick out the right playlist for you and subscribe to our channels and check us out at promisemoney.co.uk. That’s it for now. Thanks a lot. Bye-bye.