Categories
Budgeting

Using a home improvement loan to renovate your home

Renovating your home is one of the most important investments that you can make over the course of your life. Unfortunately, it can also be extremely expensive. In many cases, it may cost so much that a personal loan would simply not allow you to borrow enough money to cover the cost. In order to solve this issue, a large number of banks and other private lenders have started offering home improvement loans. These are forms of credit that are designed especially for home improvement and renovation projects. As a result, the money that you borrow will be restricted to this purpose.

This having been said, there is more to a home improvement loan than meets the eye. The fact that they allow you to borrow large amounts of money means that the lenders tend to be very careful when it comes to who they offer these loans to. Here is what you need to know about how these deals work:

You need collateral in order to get a loan

Home improvement loans can last for 5-10 years and have a value of between £1,000 – £25,000. When it comes to their terms and conditions, these deals are very similar to general-use secured loans. As a result, they also require collateral. Depending on the lender, you may be able to offer your home, your vehicle, or another property as collateral.

This means that if you are unable to make the monthly repayments, at any point in time, the lender can take possession of your property. However, this rarely happens due to the fact that lenders prefer to recover their money, rather than process your property (which is often expensive and time-consuming).

When it comes to collateral, it is also possible to use the equity that you have in your home in order to guarantee the loan. It is also possible to use the equity that you may have in a different property, making the loan extremely flexible.

A home renovation loan gives you some wiggle room

Home renovation loans allow you to borrow large amounts of money which can be extremely useful if you want to flip your home or need to repair serious structural damage that does not have a clear cost.

In terms of repayment, if anything happens and your income drops, most lenders will either agree to give you an extension or to refinance the loan and offer a smaller interest rate that will help reduce the cost of the debt. Keep in mind that most lenders will allow you to make overpayments without having to pay any fees.

What alternatives are there?

The only alternative that you have when it comes to home renovation loans is getting one or more personal loans. However, you must keep in mind that personal loans, especially if they are unsecured, will only allow you to borrow a limited amount of money. While it is possible to take out multiple personal loans, doing so can have a negative impact on your credit rating and may also increase the interest rate of each subsequent deal that you need to sign in order to get all the financing that you need.

Choose the option that best fits your needs

If you are unsure which type of loan to take out, you can start by assessing the total cost of the renovation or improvements. Once you have a rough estimate, look at how much money you can borrow using a personal loan and determine if one or two would be enough to pay for the entire project. If the price is greater, you may want to consider getting a secured home renovation loan.

Categories
Short Term Loans

10 Reasons Why Short Term Loans Are Popular In the UK

If you are a citizen of the UK, you would never have to ask your relatives and friends for a loan. All you need to do is browse the internet and find a lending company that offers short-term loans. Short term loans are loans that the borrower can pay in less than a year. Agencies that regulate lending services in the UK regulate the interest rate, which might be higher than the interest rate for long-term loans. Still, residents of the UK prefer to take this type of credit for the following reasons:

Repayment Can Be in Several Instalments

When you take a short-term loan, you can pay back in several instalments. For a six-month loan, you can pay in six instalments for six months, which is once a month or six instalments which are twice a month for three months. Spreading the payment in several instalments reduces the total amount to pay for every repayment schedule.

Convenient for Emergencies

Emergencies might require getting your hands a few hours after you realise you must find money urgently. Asking for a loan from friends and relatives can be embarrassing, take time, and full of uncertainty. When you apply for a short term loan, processing takes place the instant you sent your application and approval within a few minutes. You would have the cash you need the same day that you applied.

Collateral Not Needed

When you want to borrow a significant amount, lenders would usually ask for collateral. You could use your house, car, and anything of value as collateral before the lender would approve your application. Once the lending institution accepts the guarantee, you would get your money from your bank account. However, if you cannot pay back your loan, the lending company could seize your property. To prevent this from happening, make sure to make prompt and regular payments.

Varied Repayment Period

The borrower decides the repayment scheme as long as it is no longer than a year. Choose an option that is convenient for you and one that would allow you to make payments without delays. If you can pay back your loan within three months instead of within six months, you would be spending less on interest, and you would feel relieved that you are now debt-free.

Limited Amount to Borrow

Short term loans are usually between £100 to £10,000 payable in three to 12 months. Because of the limit, you could not borrow more than what you can afford to pay.

Few Requirements

Applying for a short term loan is easy because of the few requirements. You would only need an identification card with your permanent address and employment certificate. Short-term lenders do not give much importance to your credit rating.

No Upfront Fees

When you take a short-term loan, the lender will not deduct processing and other fees. Instead, the lending company will add all charges to the cost of the loan and include an amount every time you make payment. You can also ask the lender for the lowest price of a loan.

Helps Build Credit Record

Because of the short repayment period, you can build your credit score faster and easier. Every time you make an on-time payment, it would show on your credit record. After six months of repaying your loan, you would have something positive on your credit history. The next time you need a more significant amount of money; you could qualify for bigger loans, lower interest rate, and qualify for long-term borrowing.

For the residents of UK, short-term loans are the best option when finding solutions to financial emergencies and other needs.

Categories
Advice

Most Popular Uses of Personal Loans

Every year, borrowers in the UK take out personal loans to the amount of around £37billions. People in the UK find it convenient to turn to lenders for their financial needs. Most people take out personal loans for varied reasons, be it to pay for old loans, car repair, medical bills, or other emergencies. Here are the most popular uses of personal loans in the UK.

To Consolidate Old Debts

One of the most popular uses f personal loans is the consolidation of old debts. Thinking about paying several debts each month can be stressful. Taking a single loan to repay all your debts can give you peace of mind and help you avoid paying high-interest rates. Nowadays, several lenders extend personal loans that borrowers can use to pay off their old loans.

To improve one’s Lifestyle

You could have been planning to make some improvements to your home. The paint on your wall is already flaking, or most of your tile flooring is cracking. Perhaps, you need cash to make a down payment for a new car, or you cannot postpone a trip that you planned several years ago. Lending companies discourage borrowers from going into debt to enjoy a lifestyle that they cannot afford. However, spending on these things has remained as one of the most popular reasons for taking a personal loan.

To Spend for Big Events in one’s Life

Several events in one’s life are too significant to take for granted. A grand wedding can be too expensive for someone with a modest income.  While some people save for this big happening, the savings might not be enough. To cover for all the costs, some resort to taking a personal loan. Other events that might require more expenses than one could afford are birthday parties, especially debuts and wedding anniversaries.

To Start a Business

Do you feel that your business plan would work and bring you life-changing profits? No matter how feasible your business plan is if you do not have capital, nothing will come out of it. Selling your idea to your friends and relatives might bring you some support, but you want to be the sole owner of your business. Why not take a personal loan and turn your dream business into reality? If finance companies find your business proposal feasible, you can easily apply for a personal loan to start your business.

To Buy Gifts

Taking a personal loan to buy a gift for a loved one might sound impractical. However, there are still people that would do everything to honour their promise, including taking a loan. A father who promised a new car as a graduation gift for his son would be willing to take a personal loan to fulfil that promise.  Or he might pledge his daughter a grand 18th birthday party to show his love. Or it could be a husband that promised his wife an expensive vacation. Giving jewellery as a gift can be costly and might put the giver into debt.

To Make Ends Meet

While some people take personal loans to enjoy a better lifestyle, others do so because they need money to pay for food, utility bills, and other necessities. Personal loans have a slightly lower interest rate compared to other short term loans, and this is why most people prefer to take it.

Taking personal loans could help in times of need and even in spending on expensive items that you cannot afford to pay in cash. As long as you use it wisely ad you could pay it back without delay, there could be nothing wrong about taking a personal loan.

Categories
Loans

Why secured loans are better than unsecured ones?

It is currently easier than ever to get a loan, regardless if it is for personal use, for home-improvement, or meant to pay for a car. Lenders have dropped some of the requirements on their services in order to make them available to a wider range of people. However, the ease with which you can borrow money from lenders should not tempt you into making rash decisions. Deals that may appear to be great at the beginning may turn out to be too expensive and the other way around.

This is especially true when it comes to how most individuals decide if they should get a secured or unsecured loan. The majority of people tend to choose unsecured deals due to the fact that they involve less risk. When it comes to secured loans, if you cannot repay the money, the lender can take possession of your property. However, if the deal does not require collateral, then there is nothing to worry about, right?

Unfortunately, this is usually not the case. Unsecured loans can still do a lot of damage to your credit rating, which will affect the terms and conditions that you get in the future. In other words, taking out an unsecured loan and not repaying it, or always being late with the payments can make it impossible to borrow money in the future.

How are secured loans safer than they appear to be?

The short answer is that lenders will almost always rather get their money back than take possession of your property. Secured loans can have very high values and long terms. If anything ever happened and your income is reduced as a result, making it difficult to keep up with the monthly payments, the lenders will try to work with you in order to find a solution. They may allow you to refinance the deal and get a better interest rate. You may also ask for a term extension so that you will have to pay smaller amounts of money.

In any case, the lenders will first look for solutions and only take possession of your property as a last resort. Generally speaking, this makes secured loans almost as safe as unsecured ones, especially if you are willing to work with the lender in order to find a solution to the issue.

Why are secured loans better in the long run?

Secured loans have longer terms and come with a guarantee for the lender. This allows them to offer smaller interest rates, making the debt considerably cheaper than an unsecured loan. In the long run, getting a secured loan that has a low fixed interest rate will be a lot cheaper than an unsecured loan.

It is also important to mention the fact that you can borrow much more money using a secured loan than through one that does not require collateral. Furthermore, if you make the monthly payments on time and repay all the money that you’ve borrowed, taking out a secured loan can help increase your credit rating. This is due to the fact that it will show lenders that you can be trusted with large amounts of money and you are able to manage your personal finances in order to make the payments on time.

Make sure that you’re prepared for the commitment

Regardless of how many advantages a secured loan has when compared to an unsecured one, always make sure that you are prepared for the long-term commitment before submitting your request. The fact that they have such long terms means that secured loans should only be taken out if you have a moderate degree of financial stability.

Categories
Loans

Affordable Loan Options for the Unemployed in the UK

If you are unemployed, taking a loan can be a challenge. Many lenders prefer clients that have regular income to pay for their loan amortization. Recently, the lending industry requires the finance sector to not to extend loans to people who have no steady income, and these are the unemployed. However, unemployed residents of the UK can now borrow money from lenders that have the unemployed as their clients. To qualify for these types of loans, a borrower must be 18 years old or above, and he must be a resident of the UK. You must also have a bank account through which the lender can collect payment except for the doorstep loan in which all transactions happen face-to-face.

Borrowers with a bad credit history or no credit history at all can apply. If they pay their loan without missed or delayed payments, they could start building a good credit history. With a good credit record, borrowing money in the future would not be difficult.

How can the jobless pay them back? In the UK, even the unemployed have an income.  Here are several affordable loan options for the unemployed in the UK.

Guarantor Loans

Even if you are unemployed, you can take a guarantor loan of up to £12,000 that you can repay from 1 year to seven years. With someone to take responsibility for your loan if you cannot pay anymore, lenders are willing to grant you a credit. However, it is hard to find someone who would willingly help you get a loan. Asking your best friend, parents, siblings, or relatives to be the guarantor would give you a higher chance of finding a guarantor.

Homeowner Loan

Unemployed residents of the UK that own their home can apply for a homeowner loan. In this type of loan, you put up your house as security for the amount that you would borrow.  Because your home serves as your security, you can borrow between £25,000 and £250,000. With this type of loan, you could pay for significant expenses through a loan even if you are unemployed. However, you must pay back the amount that you borrowed plus interest rate or lose your home to the lender.

Payday Loan

A payday loan is usually for those with regular employment. Lenders would usually deduct the amount due for the mortgage every payday. In the UK, even the unemployed can get a payday loan. In this case, the lenders can collect payment every time the borrower receives the check for the borrower’s benefits from the government. You must show proof that the benefits that you receive can cover for your loan payment.

Doorstep Loan 

A doorstep loan is an old way of lending and borrowing money wherein the transaction is face to face. Borrowers may apply online, but the lender sends his people to visit the applicant in his home. The representative of the lending company explains the terms and conditions of the loan before letting the borrower sign the form. The agent gives the money to the borrower directly. The person would also visit the borrower to collect a payment, which is weekly. Doorstep lending is legal, and there is a governing body that regulates their operations, especially the interest rate and penalties.

If you are a resident of the UK, unemployment is not a hindrance to taking a loan. All UK citizens earn an income in the form of pension for retirees, unemployment benefit, child support, child care benefits, student finance for families with children in college, and disability support. As someone with an income, you are qualified to borrow money.