Dax McLean, Author at Mortgageable

£200,000 Mortgage – What are the repayments?

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

A mortgage is among the most significant commitments you’ll make in your financial life.

It’s essential to know whether you can afford it before arranging your mortgage.

To help you get an idea of what you need to save towards your mortgage, we’ll explore the £200,000 mortgage in this article, including the kind of deposit you’ll need, what the repayments may cost you, and other cost considerations.

Deposit For A £200,000 Mortgage

The amount you’ll need as a deposit for a £200,000 mortgage will depend on the lender’s loan to value (LTV) ratio, your income, credit rating, and if you’re after a buy to let or residential mortgage.

You’ll find the LTV expressed as a percentage, referring to the mortgage to property value ratio.

Generally, you may get a mortgage amount of up to 95% of the property value in the UK. Therefore, to qualify for a mortgage, you’ll need to save at least 5% of the property value as a first-time buyer.

A 20% deposit is the standard for attractive mortgages and interest rates, and the deal generally gets better every time you move up 5% in deposit size, however this depends on the lender rates available.

The higher the amount you can put down as a deposit, the lower the interest and mortgage loan amount you’ll have to repay.

It’s wise to aim for 5%, 10%, 15%, 20% milestones as you save for a mortgage. Lenders will consider you lower risk when you have a high deposit.

Related reading:

Deposit For Bad Credit £200,000 Mortgage

With a history of bad credit, lenders will consider you a higher risk, although it’s not a deal-breaker. The worse it is, the greater the risk which translates to a larger deposit and less favourable terms.

Keep in mind that not all lenders are the same, and generally speaking, each application is regarded on its own merit. Your unique situation may mean that you can get the loan you want, even with bad credit.

Lenders will ask for different deposit sizes and offer different rates for a bad credit £200,000 mortgage as lender criteria can differ from one to another.

Generally, lenders will consider issues like a few late repayments or a low credit score as low risk and offer you better rates and LTV ratios.

However, problems like recent repossessions or bankruptcy may make them more cautious, resulting in a higher interest rate or deposit – or possibly even a loan application rejection.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Deposit For £ 200,000 Buy-To-Let Mortgage

A £200,000 buy-to-let mortgage will require a higher minimum deposit than a residential mortgage. Most lenders often require a deposit of 25%, while others can accept 15% as long as you fit other criteria.

Buy to let mortgages also have other strict criteria, and a common factor to consider is minimum income requirements. Some lenders may insist that you have to be making at least £25,000 annually.

Others will look at the rental income forecasted and request that the rental payments you project cover 125%-130% of the £200,000 mortgage monthly payments.

It’s also worth noting that most lenders don’t offer buy-to-let mortgages to first-time buyers who don’t own their own homes yet. However, you can get specialist lenders who will consider you provided you meet their criteria.

Repayments For A £200,000 Mortgage

The term of the £200,000 mortgage and the interest rate you get from a lender are the main factors that will affect how much the repayments will cost you.

Remember that every lender is different, and various factors like your credit history or circumstances can affect your monthly repayments.

Interest Rate For A £200,000 Mortgage

As with any other loan, the interest rate for a mortgage loan is essential to consider. Generally, you can get an interest rate between 1% and 5% among mortgage lenders in the UK.

The table below can give you an estimate of the total repayments you would make monthly for a £200,000 mortgage at various interest rates over a term of 25 years.

Interest Rate 1% 2% 3% 4% 5%
Monthly Repayment £753 £848 £948 £1055 £1170

Interest Only Repayments

Some lenders can offer an interest-only repayment plan for a £200,000 mortgage. You only repay the interest on the loan each month and nothing off the amount you borrowed, which becomes due at the end of the term in one huge lump sum.

Because of the risk of accumulating a huge debt that may be hard to repay, lenders will require that you have a plan for repaying the total balance at the end of the mortgage term.

The Term For A £200,000 Mortgage

Mortgages can take 5 to 40 years to pay back, and the length of the term will have a significant effect on how much you’ll ultimately pay. More extended periods will have cheaper monthly payments but will have an extra cost.

A £200,000 mortgage paid over 35 years will cost you thousands more than when you repay it over 20 years or less.

The less the term of your mortgage, the less the total amount you’ll pay for the loan.

Check out the table below to get an idea of how the term affects the total and monthly repayments of a £200,000 mortgage based on a 3% interest rate.

Term Monthly Repayment Interest Total Repaid

30 years £843 £103,495 £303,495
25 years £948 £84,478 £284,478
20 years £1106 £66,169 £266,169
15 years £1381 £48,853 £248,853
10 years £1931 £31,729 £231,729
5 years £3594 £15,616 £215,616

It’s wise to base your decision on how much you can realistically afford to repay each month. Mortgage loan advisers can help you decide which is the best option for your circumstances.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Other Costs To Consider

While the deposit will take up a large chunk of your savings, other fees you’ll need to consider when getting a £200,000 mortgage include:

Valuation Fees

A valuation to ensure the property you’re buying is worth the amount you’re planning to pay is necessary. Lenders can arrange for this, but you’ll usually have to pay for it, and the costs can vary depending on the property’s value, location, and terms of the deal.

Solicitor Fees

You’ll also have to pay the fees for a property solicitor who will handle the legal aspects of your property purchase. They can charge a flat fee or a percentage of the property price. There may also be other additional fees like getting the property registered as a new owner in the Land Registry.

Insurance Fees

Mortgage lenders may require that you have the property insured from the moment you enter into a contract. This ensures coverage in case of any damage to the structure of the property. Some insurers offer home insurance with property and contents insurance that covers your belongings against theft or damage.

How Much Is A £200,000 Mortgage A Month? Final Thoughts

When considering what mortgage amount to apply for ask an expert to assist you. Affording the repayments each month comfortably should be a number one priority.

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

How Much Does A Bridging Loan Cost?

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

A bridging loan is just that: a bridge.

When you take out such a loan, you’re trying to bridge the gap in your finances. As luck usually has it, financial emergencies or unexpected expenses usually turn up when you’re short on cash.

Bridging loans can also be used to get the money you need now to pay off an incoming debt that you know you will have the money to pay for later.

The great thing about a bridging loan is that it’s flexible and pays out quickly, but the question begs to be answered: how much will the flexibility, convenience and quick pay-out cost you in the end?

Bridging loans are usually short-term and are often used to fund time-sensitive deals and projects.

Interest rates are generally higher for bridging loans than other financial products, but they’re faster to arrange than secured loans and mortgages and have more flexible terms. Plus, with the right advice and some research, you can get a good deal.

The costs of a bridging loan in the UK can vary depending on the lender and your specific circumstances.

In this guide, we’ll look at the separate elements to consider when calculating the overall cost of a bridging loan. These include interest charges, valuation fees, arrangement fees, solicitor fees, and exit fees.

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Interest Charges

Bridging loans last a few weeks or months, so lenders charge interest rates monthly rather than an annual percentage rate (APR).

Lenders will charge you interest on a bridging loan in one of three ways, and it’s essential to clarify how you’ll be assigned to determine the overall cost. These include:

Monthly

The interest repayment is set and made every month in this option, and it’s not added to your loan amount. This can mean lower interest amounts because you make payments more frequently.

Rolled Up Or Deferred

In this option, the lender adds the interest to the loan amount every month then you pay the cumulative total at the end of the term. The interest increases in value on a sliding scale because it’s applied to a renewed sum of the increments plus the previous month’s interest as the term progresses. The rolled-up option may be suitable if you can’t make monthly repayments and are short on capital until your exit strategy pays out.

Retained

In this option, you’ll ‘retain’ the interest for the entire term and repay it together with the loan amount at the end of the period.

The lender calculates the total interest at the beginning of the period based on how long you’re borrowing the amount for then you’ll make one lump sum payment at the end.

For example, if you have a 12-month loan, you’ll repay the total interest plus amount on month 12.

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Rolled Up And Retained

Some lenders can let you use a combination of repayment options like a rolled up and retained option. Here, you can repay the interest as retained for an agreed number of months within the term, and then the interest is rolled up for the remaining months.

A bridging loan adviser can offer insight and advice on the best option for you based on your needs and circumstances.

Valuation Fees

A valuation of your property is necessary if you’re using it as security to set up a bridging loan. The valuation fees are payable to the lender or surveyor, and costs can vary depending on location, value, and the required valuation type.

Sometimes a remote valuation through the internet can be enough and will be cheaper than an on-site valuation.

Read our related quick help guides:

Arrangement Fees

Also known as facility or broker fees, these will usually amount to a percentage of the bridging loan. You can find them in the terms set by the lender with a basis on the gross or net amount.

The standard amount ranges around 2%, but some lenders can go lower or waive the fee altogether, especially for large amounts.

Some lenders can also charge small administration fees to pay for the documentation and paperwork after the loan is accepted.

Exit Fees

Some lenders may charge an exit fee for loan redemption. It’s usually a fee to remove the charge over the security or property, and the standard is 1% of the loan amount. The payment will be added to the loan amount when you redeem it.

Solicitor Fees

The solicitor fee is a set charge you’ll pay to the lender to compensate for the legal expenses of the loan. Lenders often use solicitors to carry out due diligence and the costs charged to the borrower.

You have to consider these fees when calculating how much a bridging loan will cost in addition to your legal fees.

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Factors That Impact Costs Of Bridging Loans

The total cost of a bridging loan can vary depending on the lender and your level of risk. To have higher chances of getting the best rates, you need to have access to the entire market for comparisons and meet the eligibility criteria of as many lenders as possible.

You should remember that different lenders may use differing standards. However, most bridging loan lenders will offer favourable rates and terms to borrowers with:

• Viable and robust exit strategies

This involves how you’re going to repay the bridging loan. It’s vital in any bridging loan deal, and the stronger your exit strategy, the higher your chances of getting reasonable rates.

• Good credit histories

A good credit standing will improve your chances for better rates. However, most bridging loan lenders have flexible criteria that cater to borrowers with bad or poor credit histories.

• Good security

The property you use as security can be part of your exit strategy. If your plan involves selling the property, it’s essential to ensure that it’s desirable enough to guarantee its sale at the desired amount.

A lender can look at factors like type, condition, or location to determine anything that may deter potential buyers.

Check Today's Best Rates >

Costs For Regulated and Unregulated Bridging Loans

Generally, the cost of a bridging loan will be the same whether it’s regulated or unregulated. Regulated means the lender must comply with the Financial Conduct Authority (FCA) rules involving independent advice and mis-selling and usually cover personal bridging loans.

Unregulated bridging loans usually involve commercial borrowers, and the lending is agreed on a case-by-case basis for projects that don’t include a residential home. Such borrowers often require more flexibility, and the agreement is tailored based on their needs.

Give us a call on 03330 90 60 30 or get in touch for advice that is personal to you and takes your credit history into account. That way you will know where you stand in the development finance market and we can guide you on your route to securing a suitable loan.

How Much Is A £150,000 Mortgage A Month?

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

Before taking out a mortgage, it’s advisable to find out how much it will cost you to pay back monthly.

Mortgage repayment will probably be your most significant outgoing expense every month, and it’s vital to know whether you can afford it now and in the future.

In this guide, we’ll break down how much a £150 000 mortgage could cost you per month, the factors that influence monthly costs, and how you can get the best rates available.

Monthly Repayments For A £150 000 Mortgage

How much you pay every month for a £150000 mortgage will depend on various factors.

The most important ones are the length or term of the mortgage and the interest rate you’re given.

Keep in mind that every lender is different, and they’ll have their criteria to determine the rates they give you.

Factors like your profile or credit history and your level of deposit can influence the interest rate a lender is willing to offer.

Interest Rates For A £150,000 Mortgage

The interest rate affects the monthly repayments on any loan, and you typically you may get a rate ranging between 1% to 5% for a £150000 mortgage in the UK based on current rates.

The interest is usually added to a portion of the capital or amount borrowed and paid back each month for the loan duration.

Here’s an illustration of how the monthly repayments can differ on a £150000 mortgage with a 30-year term based on different interest rates:

Interest Rate 1% 2% 3% 4% 5%
Monthly Repayment £482 £554 £632 £716 £805

Interest Only Repayments

You may also get the option to repay only the interest every month for a £150000 mortgage. In such an agreement, the total amount of capital borrowed becomes due at the end of the term, and you only repay the interest each month.

However, to qualify for an interest-only £150000 mortgage, you must show the lender evidence of a viable repayment strategy. This is because you risk piling up a huge debt that can be difficult to repay without a good plan.

The repayment strategy assures the lender that you can cover the entire balance at the end of the mortgage term.

You’ll also need a larger deposit to qualify. With an interest-only mortgage, you’ll have lower monthly costs since you’re not paying anything off the capital amount.

Related reading:

The Term For A £150 000 Mortgage

Typically you may get a term of between 5 to 30 years to repay a £150000 mortgage depending upon your circumstances. The term will have a massive effect on your monthly repayments as well as the total amount you’ll ultimately pay.

With a more extended period, you’ll have cheaper monthly payments. However, the total amount you’ll repay for the loan will be higher than a shorter period. You can save thousands by repaying your loan over a shorter period.

To give you an idea of how the term affects monthly and total payments of a £150 000 mortgage, check out the table below, which is based on a 3% interest rate.

Term Monthly Repayment Interest Total Repaid

30 years £632 £77,621 £227,621
25 years £711 £63,358 £213,358
20 years £832 £49,627 £199,627
15 years £1,036 £36,437 £186,437
10 years £1,448 £23,796 £173,796
5 years £2,695 £11,712 £161,712

The less the loan term, the less the total amount you’ll pay, but the higher the monthly payments. Keep in mind that the period you get will depend on your circumstances, and it’s wise to base your decision on the amount you can realistically afford each month.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Deposit Amount Affects How Much You Pay Monthly

The deposit you’ll need for a £150000 mortgage will depend on the lender’s loan to value (LTV) ratio. It describes how much a lender is willing to offer you compared to the value of the property you’re buying and is expressed as a percentage.

For example, with a £15000 deposit, you’ll own 10% on a property worth £150 000 and borrow 90%. This makes the LTV ratios 90%.

With a low deposit, you’ll be seen as a riskier borrower, which may translate to higher interest rates from lenders. Lenders in the UK can offer you a mortgage of up to 95% of the property value depending upon lender criteria.

The higher the deposit, the lower the interest and loan amount you have to repay monthly and in total.

Bad Credit Effects On A £150 000 mortgage

There are bad credit £150 000 mortgages available in the UK, but lenders may require a higher deposit and charge you higher interest rates to offset the risk. This will ultimately translate to higher payments every month.

It’s important to remember that every lender is different, and each borrower is treated as an individual on a case-by-case basis. Each may offer different rates and ask for different deposit sizes for a bad credit £150 000 mortgages.

You can still get reasonable rates and LTV ratios depending on the severity and recency of your bad credit issue. Lenders will favour borrowers with older credit issues compared to those with more recent misdemeanours. Consulting a mortgage adviser can help you get the best rates for your circumstances.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Monthly Payments For A £150 000 Buy to Let Mortgage

Your monthly payments and deposit will be different depending on whether you’re eyeing a residential or buy to let mortgage. Many buy-to-let mortgage providers require a 25% deposit, and others can ask for 15% provided you meet their criteria.

The monthly payments may be lower because most buy to let mortgages are on an interest-only repayment basis. Also, unlike residential interest-only agreements, you don’t require a viable repayment strategy in buy to let mortgages.

Lenders gladly accept the sale of the property at the end of the period to cover the amount with a buy to let.

Other Fees That May influence How Much You Pay

In addition to the interest and capital percentage, other fees may influence how much you pay each month i.e. broker fees, lender fees, buildings insurance.

How Much Is A £150000 Mortgage A Month? Final Thoughts

When considering what mortgage amount to apply for ask an expert to assist you. Affording the repayments each month comfortably should be a number one priority.

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

Help With a Mortgage Deposit

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

When it comes to mortgage deposits, it’s important to be informed. One of the first things to know is that the higher your deposit amount, the less you have to borrow to cover the cost of owning a home.

You may also get better interest rates and more favourable terms if your deposit is a decent amount.

However, saving as you balance other financial needs like living costs or rent can be challenging and tedious, making heft mortgage deposits difficult to achieve.

Fortunately, various government schemes and non-government options in the UK can help with mortgage deposits as you save up for a home.

Read on to learn about the plans and options available to help boost your savings and make your mortgage deposit as big as possible.

Government Mortgage Schemes

Help To Buy: Equity Loan

The Help To Buy Equity Loan is a shared equity scheme only available in England for first-time buyers and current homeowners who wish to move.

You can only use this scheme for newly built homes with a maximum value of £600,000.

To qualify, you need to have a minimum 5% deposit saved. The government will give you an equity loan of up to 20% of the property’s value. Add this to your 5%, and you’ll only need to secure a 75% mortgage.

The loan will be interest-free for the first five years. A 1.75% fee is payable from year six, and it rises annually by inflation plus 1%.

The repayments are interest-only, and you can repay the loan anytime or when you sell the property.

London features high property prices. The government increases the loan’s upper limit to 40% of the property value if you purchase in London.

This means that after you add the 5% you’ve saved, you’ll only need to take out a 55% mortgage to cover the rest.

Related reading:

Shared Ownership

The Shared Ownership scheme is available in England only, and it allows you to buy a share of your home if you can’t afford a 100% mortgage.

You can buy between 10% to 75% of the home’s value and pay the remaining share as rent. You’re also allowed to buy more shares later on when you can afford to with a gradual staircasing model.

Properties in Shared Ownership are always leasehold, and you can buy a newly built home or an existing one through resale programmes from housing associations.

You can take out a mortgage to pay for your share of the home’s purchase price or fund it with your savings.

Your household earnings must be £80,000 a year or less, and you have to have saved a minimum of 5% of the property’s value to buy a home through shared ownership.

If you’re in London, household earnings must be £90,000 a year or less. You can also qualify if you’re a first-time owner, used to own a home but can’t now, or are a shared owner wishing to move.

Lifetime Individual Savings Account (LISA)

A LISA can be opened by anyone aged between 18 and 39 years, and you can use it to buy your first home provided it costs £450,000 or less.

You must make your first payment into a LISA before you turn 40, and you can put in up to £4,000 annually until you turn 50.

The government will add a 25% bonus on whatever you save with a maximum of £1,000 per year if you save the full £4,000. Additionally, if you’re buying a home with someone else, you can both take advantage of separate LISAs.

Keep in mind that there’s a penalty if you take money out of a LISA and fail to put it towards a home deposit.

Only first-time buyers can use LISAs to buy a home. This means you can’t use LISAs to purchase a home if you own or have owned a home in the UK or anywhere else in the world.

However, you can still use LISAs to save for later life. You also have to ensure you use a traditional repayments mortgage and buy a home you plan to live in or occupy. LISAs are not eligible for buying holiday homes or homes you want to rent out.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Right To Buy

The Right to Buy scheme is available if you’re a housing association or council house tenant in England or Northern Ireland.

It can help with your mortgage deposit by allowing you to buy the property at a discount or less than its market rate.

To qualify, you must have been a secure tenant for at least three years. The discount you get on the property’s price will depend on the length of your tenancy, the property type, and its market value.

If you live in an eligible house in England, the discount will be between 32% and 60%, depending on your tenancy length. For flats, you can get a discount between 44% and 70%.

The maximum Right to Buy discount you can get in England is £84,200, £112,300 in London, and £24,000 in Northern Ireland. You’ll not have a right to buy if you’re under the threat of eviction, have large debts, are bankrupt, or your home is for the disabled or elderly.

Keep in mind that you have to use the home you want to buy as your new home, and if you sell within five years, you’ll have to repay the total discount or some of it plus a share of the profits.

Right To Acquire

The Right to Acquire scheme is available in England if you’re a housing association tenant who doesn’t qualify for a Right to Buy option. You must have at least three years of tenancy and purchase the property as your main home.

The discounts for the Right to Acquire scheme are usually lower than for the right to buy and typically range between £9,000 and £16,000.

The house must have been built by public funds or taken over from a local council, and your landlord must be a member of a housing association or be on the social housing providers register.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Other Schemes

Guarantor Mortgage Schemes

In this scheme, a family member or friend can use their home or money as security or deposit on your behalf. The guarantor has to own their property or have enough equity to satisfy the lender to qualify. Proof that they can cover your payments when you default and good credit is also needed.

Many lenders accept guarantor mortgage arrangements, and some may even allow taking a 100% mortgage with a guarantor. However, it’s better to use some of your savings if you want the best rates.

Bank Schemes

Some lenders and banks offer special mortgages aimed at helping first-time homeowners who are short of funds. Some even allow relatives to leverage their savings to help you buy a home.

You may be required to contribute a minimum of 5% of the property value while your relative provides a 10% deposit.

Remember, each lender will have different requirements on the minimum deposit together with different rates and terms. However, it’s a viable option to consider if you have a friend or relative willing to help contribute towards your mortgage deposit.

Help With a Mortgage Deposit Final Thoughts

The above schemes are intended to help boost your deposit and enable you to get competitive rates and terms from various lenders. A mortgage adviser can help you find the most suitable deal for your situation.

First Time Buyer – Ready to get on the property ladder?

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

£30000 Loans for Bad Credit UK

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

A £30,000 loan can have a dramatic impact on your life and help you cover a wide range of purposes and desires.

£30,000 is a large amount to borrow, and it can be secured or unsecured depending on your credit history and lender.

To many, a £30,000 loan is the proverbial shining light at the end of the tunnel because it makes it possible to afford things you would otherwise have to save for many years for. Here’s everything you need to know about £30,000 loans.

How Does A £30,000 Loan Work?

You can apply for a £30,000 loan online through a quick application process that only takes a few minutes. They usually involve an agreement between you and the lender where you promise to repay within the agreed timeframe.

Once you’re approved, your application will be processed usually in a short time frame. You’ll then receive a lump sum and repay the money plus interest over the chosen term until the loan is settled.

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Most lenders offer fixed interest rates for £30,000 loans, and they’re usually repaid in monthly instalments. This means the interest and monthly payments will remain the same for the entire loan term.

When assessing your application, lenders will consider your monthly income and expenses to determine affordability.

They’ll also look at your credit history, which will tell them how you handle your finances and your likelihood of repaying the loan.

Related quick help guides:

Uses Of A £30,000 Loan

You can use a £30,000 loan for any purpose without restrictions. Common uses include:
Personal And Business Needs

You can use a £30,000 loan to finance different personal financial needs, whether large or small. You can accomplish what you desire or buy what you need now and pay later through affordable monthly payments.

A £30,000 loan can help you buy a home, car, land, advance your education, finance your dream wedding or take your family on vacation or a holiday retreat. You can use it to invest in yourself and acquire new skills to advance your career.

A £30,000 loan can give you the boost you need to get started if you have a business idea but no funds for capital. If you already have a business, the occasional cash injection may be necessary.

With a £30,000 loan, you may be able to cover the costs of current and future business needs. It can help you get new stock, resources, equipment or when you need to expand your business or relocate.

Home Improvements

Home improvements projects can be very costly, but with a £30,000 loan, there’s no need to worry. It’s an excellent way to re-invest into your property and improve its curb appeal and value. Whatever home improvements you desire, a £30,000 loan can provide the finances you need to cover the costs.

You can use it to achieve your goals, including a new bathroom, kitchen, extensions, or conversions. A £30,000 loan can also come in handy when you need to carry out urgent home repairs or maintenance like replacing an entire roof, buying new shingles or exterminating a termite infestation.

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Consolidating Debts

It may feel like you don’t have a way out as you struggle under the weight of multiple high-interest debts, but you do. You can use a £30,000 loan for debt consolidation where you combine and pay off multiple outstanding debts at once using the proceeds from the loan.

If you owe money on various debts with high interest rates, you can use a £30,000 loan to cover the total amount. You can eliminate the debts from different creditors and remain with only one lender to deal with.

Instead of making multiple payments to different creditors every month, you’ll be making one manageable monthly payment.

It will allow you to catch your breath, and you’ll benefit from reduced costs and the simplicity of a single loan.

£30,000 Loan with Bad Credit

Lenders may still consider you for a £30,000 loan even with bad credit. Even if your credit score is because of late payments, defaults, or county court judgement (CCJs), a £30,000 loan is still within reach.

Many understanding lenders in the UK will consider you even if you’ve had an Individual Voluntary Agreement (IVA) or are currently on a debt management plan.

Instead of focusing solely on your past financial troubles, lenders who specialize in lending to bad credit borrowers will consider your current circumstances. Working with a loans advisor can help you find specialized lenders who help borrowers with bad credit access financing solutions.

Improving Your Chances of Approval

If you have a bad credit score or are finding it difficult to get approved for a £30,000 loan, you can improve your chances or approval and get reduced interest rates by:

Providing Security

You can secure a £30,000 loan by pledging one of your valuable assets as collateral for loan repayments, usually your home. The lender will place a lien on the collateral and acquire the right to seize it and sell it as a last resort to recover the loan if you default.

With security, lenders know you’ll be motivated to repay the loan to avoid losing your asset. If you’re using your home as collateral, a home visit will not even be necessary, thanks to online property valuation, and you won’t need to contact your mortgage company.

A secured £30,000 loan is more accessible if you have a bad or non-existent credit history. You’ll get favourable terms and easy monthly repayments that will improve your credit score in no time.

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£30,000 Loans for Bad Credit Final Thoughts

A £30,000 loan can help you cover large costs and expenses now and let you repay in easy monthly instalments over a long period. It’s crucial to ensure you can comfortably repay the loan before you commit, especially if you’re securing it against your home.

Even with bad credit, you can greatly improve your credit scores by diligently making repayments on time. Ensure you have a reasonable monthly budget and avoid additional debts before repaying the loan in full.

Give Loanable a call today on 01925 988 055 and they will provide you with the best deals available to meet your circumstances and consider any credit history you may have. With their expert advice, they can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of Loanable’s secured loan experts by emailing hello@loanable.co.uk who can work with you to find the best deal for your needs and circumstances.

Loans Against Your House – Borrowing Money Against Your House UK

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

Loans against your house allow you to borrow large sums of money and get access to the funding you need when you need it. A loan against your home is the same as a secured loan.

Unlike unsecured loans, secured loans may allow you to borrow considerable sums at a lower interest rate even if you have bad credit.

Read on to find out everything you need to know about taking loans against your house.

How Do Loans Against Your House Work?

Loans against your house are loans that use your property as collateral. You can only take out a loan against your house if you own all or part of your home in what is known as equity in your property.

The lender will use the value of your property or the equity to determine how much you can borrow up to a certain percentage of the value.

The value of your house acts as the security for the loan, and you must pay off the loan each month over an agreed time frame.

If you fail to keep up with repayments, you risk losing your home because the lender can take action to repossess and recover the outstanding debt.

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When you apply for a loan against your house, the lender will want to see if you’ve built up equity in your home if you don’t own it outright. It involves having paid off part of your mortgage or having a home that’s increased in value.

Lenders will also look at your credit score and monthly income, and outgoings to determine affordability. They’ll use this information to decide how much they can advance to you and the interest rate they’ll offer.

Types Of Loans Against Your House

You can take out different types of loans against your house, including:

Secured Loans

These are loans secured against the value of an asset, in this case, your home. They’re also called homeowner loans, and they feature large amounts and more extended repayment periods than standard loans.

Second Mortgages

Also called a second charge mortgage, this is a secured loan that uses the equity or capital in your home as collateral. The amount you can borrow on second mortgages will depend on the difference between your home’s value and the amount you owe on your first mortgage.

It’s completely separate from the first mortgage and is an excellent way to access further advances or extra funds without remortgaging. You’ll have two mortgages to pay off on your home, and if you fail to repay either the first or the second, you risk losing your house.

Related quick help guides:

Remortgaging

Remortgaging involves switching to a new mortgage provider without moving from your current house. You may be able to obtain a better deal with your existing lender or switch to a new lender.

Remortgaging is suitable if you’re looking for a better deal, want to fix your rates or need to take money out of your property.

Remortgaging can help you find better terms and lower rates, and the amount you can borrow will depend on your financial situation.

Features Of Loans Against Your House

A loan against your house is ideal if you’re looking for a large sum you can repay over a more extended period. Features include:

High Loan Amounts

Loans against your home enable you to borrow more considerable sums of money than unsecured loans. The value of your property or equity will influence the amount you can borrow. The more valuable your property is, the more money you can borrow.

Low-Interest Rates

A loan against your home is less risky for lenders, making them more willing to advance a loan at more favourable interest rates. Repayments will also be spread over long periods, further reducing the interest rate. Since lenders will make their money over the long term, they’ll happily offer attractive interest rates.

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Instalment Payments

With loans against your home, you can often borrow over longer periods than personal loans. You’ll repay in small manageable monthly instalments. Repayment plans are outlined right from the outset, making it easy to plan for monthly payments.

The instalments include a percentage of the principal amount plus interest spread evenly over the loan’s duration.

Uses Of Loans Against Your House

It’s risky to borrow against your home, and you should only consider it when there are no alternatives. Loans against your house are suitable for large projects, including:

Home Improvements

Home improvement projects are an excellent way to re-invest in your property, increase its value and curb appeal. Such projects can guarantee a lucrative deal when you decide to sell, but they can be expensive.

You can take out a loan against your house to cover the costs of your desired home improvement project. You can use the funds to finance a new kitchen bathroom, extensions, conversions, renovations, home maintenance or needed repairs.

Personal And Business Needs

You can borrow against your property if you need more money than standard personal loans and want long repayment periods. The funds can help you make large purchases like buying land or a second property.

If you have a business idea but no funds for capital, a homeowner loan may help you get started. You can also use it to inject cash into your business to finance needs like resources, stock, equipment, expansions or investments in new premises.

Loans Against Your House with Bad Credit

You may qualify and get approved for loans against your house, even with bad credit. Your property will significantly reduce the risk for the lender because they can reclaim the outstanding debt by repossessing your home if you default.

It’s a more accessible option if you’ve found it challenging to get a loan because of your credit score. You can borrow more considerable sums for longer, and the easy repayments will help to improve your credit score.

Read our complete guide on how do secured loans work?

Loans Against Your House Final Thoughts

Loans against your property can give you access to large amounts, more extended repayment periods and favourable interest rates. However, they come with the risk of losing your home as the lender has a legal claim to your property if you default.

It’s crucial to ensure you can comfortably pay on time every month throughout the loan’s term, even when your circumstances change.

How Much Can I Borrow Against My House? UK

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

Borrowing against your house involves taking out a homeowner loan. You can find lenders in the UK who offer homeowner loans from £1,000 to £2.5 million.

However, the amount you can borrow against your house will depend on several factors, including:

The property’s value.
The equity you have in the property.
Your credit history.
Your affordability.
The LTV ratio.

When you borrow against your home, you’ll be able to get higher amounts than you could with an unsecured loan. The risk to the lender is reduced because they can repossess the property and sell it as a last resort to recover the owed debt if you default.

Lenders will look at your monthly income and outgoings to determine how much you can afford to borrow. They’ll also often look at your credit score to determine how well you handle your finances and debt repayments.

A bad credit score may not necessarily disqualify you from borrowing against your house, but it can influence the amount and interest rates lenders are willing to offer.

The equity you own in your home will highly determine the amount you can borrow rather than the worth of your house. This is especially significant if you have a mortgage on your home.

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What Is House Equity?

House or home equity refers to the value or portion of your property that you truly own. You’ll have 100% equity in your home if you own your house outright, but the proportion will be lower if you still have a mortgage.

You can easily work out the amount of equity you have in your house by subtracting the amount you have left in your mortgage from its current market value.

For example, let’s say you bought a house worth £300,000, put down a deposit of £60,000, and took out a mortgage to cover the remaining £240,000. In such a case, you would have £60,000 equity in your home.

Remember, the equity in your home grows over time as you continue to repay the mortgage and as the value of the property increases. If you’ve owned your house for several years and you’ve kept up with mortgage repayments, you likely have much more equity in it than when you originally bought it.

The more equity you have in your home, the more you’ll be able to borrow against your house.

The Loan To Value Ratio

The loan to value (LTV) ratio is an important metric that assesses the lending risk lenders carry by providing you with a loan. It’s an important figure for re-mortgagers and homebuyers, and it will have a considerable impact on your borrowing power.

The LTV refers to the size of the loan relative to your property’s value or the equity you have in the property, and it’s expressed as a percentage. It shows how much equity you have in the house you’re borrowing against or how much money would be left if you sold your home and paid off the loan.

The LTV is vital when determining how much you can borrow against your house because it assures lenders. Lenders use it as they consider whether to approve a loan and what terms to offer. If the LTV is higher, the risk is higher for the lender, and if you default, the lender is less likely to recover their money by selling your house.

All homeowner loans set a maximum loan to value ratio. If yours is too high, your loan may not be approved, or you may be required to purchase mortgage insurance which protects the lender if you default and they’re forced to foreclose.

Related quick help guides:

Calculating the LTV

You can calculate your LTV by dividing the amount you wish to borrow with the equity you have on your house.

LTV = Loan amount / Equity

For example, if your equity is £300,000 and you want to borrow £180,000, the LTV would be 60%.

If you have an outstanding mortgage balance on your property, you must deduct the balance before calculating your LTV.

For example, if your home’s value is £300,000 and you have an outstanding balance of £60,000 on your mortgage, you have an equity of £240,000. If you want to borrow £180,000, the LTV will be 75%.

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How The LTV Impacts Borrowing Against Your House

Interest Rates

The higher the LTV, the higher the interest rates since lenders will consider you as riskier. Therefore, you should aim for a lower LTV, which will reduce the interest rates and translate to lower monthly payments and less strain on your finances over the loan’s term.

Loan Amount

The LTV will determine your credibility, and the lower it is, the easier it becomes to qualify for more favourable terms, including higher loan amounts and low rates. If you’ve been paying off your mortgage and your home has risen in value, then your LTV will be lower, helping you qualify for better deals.

Can I Borrow Against My House With Bad Credit?

Yes. Even with bad credit, you can borrow against your house and get approved. The loan is secured against your property which significantly reduces the risk for the lender since they can repossess and sell the property if you default.

If you’ve found it hard to get approved for a loan because of your credit score, borrowing against your home may be an option. You may get access to higher amounts with easy repayments that will help improve your credit score.

Remember, like other forms of borrowing, your credit history plays a part in the lending decision. Lenders may charge you higher interest rates if you have bad credit or cap the amount you can borrow.

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Other Costs To Consider

Valuation Fees

A valuation to ensure your house is worth the amount you’re borrowing may be necessary. The lender can arrange for this, but you may have to pay for it, and the costs may vary depending on your property’s location, value, or terms of the deal.

Insurance Fees

Lenders may require that you have your house insured, especially if the LTV is high. Insurance protects you and the lender when you’re unable to repay or any unfortunate event causes damage to the property’s structure.

How Much Can I Borrow Against My House? Final Thoughts

Borrowing against your house provides you with access to large sums of money depending on the equity you have in your property, your credit score, and your LTV ratio.

It also comes with the risk of losing your home if you fail to make repayments, so it’s vital to ensure you can afford the loan amount you’re requesting over the long term.

What is an APRC mortgage?

by Dax McLeanPosted on 3rd November 2021 | Updated 20th January 2023

APRC is the annual percentage rate of charge. It’s the interest rate associated with secured loans and mortgages.

Different secured loans often come with different rates, and it can be challenging trying to determine which loan offers the best value and is suitable for your specific needs.

In 2016, the Financial Conduct Authority (FCA) introduced the APRC to give you a more realistic view of how secured loans and mortgages will cost over the long term.

Here’s everything you need to know about APRC rates.

How Do APRC Rates Work?

APRC rates are expressed as a percentage, and they bring together all the charges of the loan, including fees and other costs.

The APRC is calculated as if you’ll keep the secured loan or mortgages for the full term without any changes.

The APRC rate will help you compare secured loans so you can understand how much any deal you’re considering will cost you. This ensures you make an informed decision among secured loan options and choose the best and most suitable deal available.

You can find secured loans that offer lower interest rates, known as an introductory rate, for the first few years before the rates revert to the lender’s standard variable rate. The APRC considers this and shows you the impact the different rates, together with any other charges, will have over the full term of the secured loan or mortgage.

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Uses Of APRC Rates

The APRC rate gives you a glance at which lender provides the best deal after considering all the costs. The lower the APRC rate, the cheaper the loan.

Marketers will often try to persuade you to choose a specific loan option with attractive offers like low starting or introductory interest rates. However, once you consider all the factors, you may find that a once appealing offer is quite expensive compared to other lenders.

For example, once the introductory period ends, the lender may introduce high variable interest rates. The APRC helps you see that and ensures misleading offers with attractive starting rates do not sway you. With the APRC, you can compare secured loan costs from different providers using the same parameters.

Related quick help guides:

Calculating The APRC

The APRC considers the initial or introductory interest rate and the long-term interest rate together with any other charges and calculates a percentage. The percentage tells you how much it would cost you every year if you stayed on the same deal until the loan is fully repaid.

The APRC rate combines factors specific to you, including the loan term, loan amount, credit history, and house value. Such factors are assessed at the initial application stage when checking your affordability and total loan cost.

Consider an example of a borrower who wants to buy a house worth £150,00o. With a £20,000 deposit, the APRC can help you compare two possible secured loans for £130,000.

The first option offers an introductory rate of 2.99% for 24 months. It then increases to a standard rate of 4.94% for 18 years with arrangement fees of £250.
The second option has a starting interest rate of 3.26% for 24 months. It then increases to a standard rate of 4.34% for 18 years with arrangement fees of £1,400.

At face value, the first option is very tempting. You may think it’s a no-brainer because it has a lower initial rate and fewer fees. Here’s where the APRC comes in handy. The first option would cost £218,026, while the second option would cost £205,829 when considering all interest rates and fees.

The APRC for the first option would be 4.6%, while the APRC for the second option would be 4.2%. Therefore, the second option would save you £12,000, making it the better and cheaper option over the loan’s lifetime.

Suitability Of APRC Rates

The suitability of APRC rates when comparing secured loan options will vary. When calculating the APRC, it’s assumed that you’ll keep the same secured loan or mortgage plus the lender for the loan duration. This can limit the suitability of the APRC rates.

You may want to move from your current home or compare other deals when your fixed term ends and switch to another lender with a more competitive deal.

It’s important to consider such factors before looking at different APRC rates, including how long you plan to stay on the property or life events that are likely to happen and impact your living situation.

If you don’t plan to stay with the same provider or will be actively switching, the initial rate will be more important than a high APRC. Since you plan to pay off the mortgage or secured loan early and get a new one when you move or switch, the initial rate will apply for a larger proportion of the loan than is shown in the APRC, which assumes you’ll be in the deal for the full term.

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How Does Representative APRC Work?

The representative or headline APRC is the rate advertised with the assumption that all other factors are constant. Most people approved for the secured loan or mortgage product will pay this rate or lower. The interest you’ll be charged when you take out a secured loan or mortgage will depend on:

The amount you’re borrowing.
The period or term of the loan.
Your circumstances, including your affordability and credit score.

Therefore, you may find a representative APRC advertised as 5%, but once the lender considers your unique circumstances and credit history, the actual APRC goes up to 9%. It’s vital to ensure you double-check the actual APRC once a lender approves your loan request.

APRC Vs. APR

The APRC can easily be confused with the APR because of the similar names and meanings. APR refers to the annual percentage rate and functions like the APRC. It can help you compare the total cost of loan products by showing a percentage of the interest cost you’ll pay on loans per year.

While the APR only shows the loan cost per year, the APRC shows the total cost of the loan once you repay it in full for the entire term.

APRC Final Thoughts

Think of the APRC as a tool that helps you compare secured loans and mortgages to find the best deal available. The lower the APRC, the cheaper the loan in the full term. The APRC assumes you’ll stick with the deal to the end. Always consider any possible changes that can affect your situation soon when using APRC rates to compare secured loan options

Income And Expenditure Explained – Loan Application UK

by Dax McLeanPosted on 1st November 2021 | Updated 20th January 2023

Calculating your income and expenditure helps ensure your budget is accurate. It’s an excellent way to organise your finances and gain better control of your cash flow.

There are many income and expenditure forms available on the internet.

They’re also called budget planners or budget calculators, and you should choose one that suits you best to understand your financial situation better.

Let’s explore everything about income and expenditure forms.

What Is An Income And Expenditure Form?

An income and expenditure form is a standard or common financial statement you can use to list all your income, debts, and spending every month. An income and expenditure form is similar to a budget in many ways:

They both require filling in your income, obligations, and expenses.
To gain a true reflection of your financial situation, you must be as honest and accurate as possible.
They involve costs and expenses that have more priority than others.

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Benefits Of Calculating Your Income And Expenditure

Calculating your income and expenditure is an exact method for analysing and understanding your finances. It will help you answer a few key questions, including:

Do You Spend More Than You Earn?

If you’ve found yourself building up debts or eating into your savings, you’re likely overspending. Spending more than you earn is a significant cause of debt spirals and severe problems for many UK residents.

A debt spiral involves a financially unhealthy lifestyle where you spend more than you earn, borrow to fill the gap, use most of your income to repay debts and keep borrowing to maintain the lifestyle. With all your income going towards debt repayments, you’ll have nothing left!

To regain control, you need an accurate idea of the scale and size of the problem by calculating your income and expenditure. It will help you see exactly where your money goes and identify areas where you could cut back spending.

What Can You Afford To Spend?

Calculating your income and expenditure gives you an accurate and realistic assessment of your monthly disposable income. It shows you where you’re spending to prioritise and alter what you do with your money so you can stick within your means.

Knowing what you can afford is useful when you’re thinking about taking out a loan. A standard financial statement or income and expenditure form is used and recognised by various lending and financial institutions. You can use it to show creditors how much you can realistically afford to pay them.

Most brokers and debt advice providers will initially ask you to complete an income and expenditure form when you’re looking for a loan or help with your debts. It allows them to assess your income and spending to provide the right advice according to your situation and connect you to suitable creditors.

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What To Include In An Income And Expenditure Form

A typical income and expenditure form will have the following sections:

Your Income

In this section, you’ll fill in any money you regularly receive, including:

Employment or self-employment income
Child or working tax credit
Jobseeker’s allowance
Universal credit
Housing benefit
Income support
Pension payments
Rental income
Housekeeping from partners or dependants

Ensure you include all types of income you receive to provide an accurate picture of your situation.

Related quick help guides:

Your Priority Bills

Household or priority bills are the most necessary expenses, and you must account for them. Failing to pay priority bills like your rent or mortgage comes with severe consequences like repossession or getting kicked out of your home. Priority bills can include:

Mortgage, rent or secured loan payments.
Utilities like gas, electricity and water.
Council tax.
Fuel like oil, gas or logs
TV licenses.
Logbook loans or hire purchases.
Child maintenance.
Magistrates court fines.
County court judgements.

Other Spending

Although they’re also important, they’re not necessarily as crucial as household bills. They include:

Car insurance or breakdown covers.
Streaming and digital television services.
Insurance for buildings and contents.
Pension or life insurance.
Internet and telephone.
Maintenance and repair costs.
Public transport.
Accident or medical insurance.
Professional or union fees.
Education fees.

Other Living Costs

Living costs include anything you spend money on every day. You can work these out using an average from recent shopping receipt figures or bank statements. They can include:

Individual and family food costs.
Clothes and footwear.
Toiletries.
Opticians and dentists.
Hairdressing.
Emergencies and sundries.
Prescriptions and medicines.
Hobbies, sports and entertainment.
School essentials and pocket money.
Parking costs and petrol.

If you spend too much on non-essential living costs, creditors may require more information to determine whether it’s reasonable.

Non-Priority Debts

In the final section, you’ll list down the debts you currently owe and the payments that go towards them. The amount you give creditors depends on the surplus left after you’ve covered priority payments like household bills, living costs and other expenses.

Items considered as non-priority debts include:

Credit and store cards.
Unsecured loans.
Overdrafts.
Catalogue repayments.
Payday loans.
Arrears from properties you no longer live in.
Arrears from service providers you no longer use like gas or electric.

Remember, non-priority debts can become priority debts if creditors pursue and are successfully granted a county court judgement (CCJ) against you by the court.

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Expert Tips Before Calculating Your Income And Expenditure

Gather Receipts And Statements

Bring together all your receipts and statements to avoid guessing or estimating. The success of your endeavour will rely on actual income and expenditure costs.

Accuracy, Accuracy, Accuracy

We can’t emphasise this enough. Try to be as accurate as possible and avoid underestimating your expenditure. When you’re not sure, guess larger, not smaller. It will ensure you have funds leftover and you don’t fall short.

Stay vigilant of overlapping some types of spending in different sections to avoid counting them twice. If you include insurance in the other spending section, don’t include it again in living costs.

Don’t Forget About One-Off Spends

Whether it’s a birthday treat or a holiday, one-off spending will affect your expenditure costs. You can account for these by apportioning their annual costs into monthly amounts. If you include one-offs like holidays, don’t forget to subtract regular spending that wouldn’t occur. For example, if you’re abroad for a week, you won’t spend on regular petrol, parking or public transport costs.

Income And Expenditure Final Thoughts

Provided you’re honest, an income and expenditure form will give you an accurate assessment of your budget and show you what you can afford and where you spend more than you earn.

It will help you make the most out of your money, cut out necessary expenses, and stop running up enormous debts or over-commitments. If you already have debt problems, it will show you how much you can spare so you can make realistic offers to creditors.

Debt Consolidation Loans for Bad Credit UK

by Dax McLeanPosted on 29th October 2021 | Updated 20th January 2023

If you struggle with multiple, high-interest debts, a debt consolidation loan can give you a breath of fresh air and help you regain control of your finances.

Here’s everything you need to know about debt consolidation loans.

What Are Debt Consolidation Loans?

Debt consolidation loans are types of loans you use to streamline your debts into one for effortless monthly payments.

It can get overwhelming if you make different payments for various loans like credit cards, personal loans, store cards, or overdrafts each month.

Debt consolidations loans allow you to consolidate such debts and cover the total amount, so you’re only left repaying one lender instead of multiple creditors.

How Do Debt Consolidation Loans Work?

Debt consolidation loans relieve you from debts by giving you an affordable repayment period and reducing your monthly payments. The process is pretty straightforward.

The loan may allow you to get the funds needed to cover all your existing debts and pay them off at once.

Once you pay off all your creditors, all that’s left is one fixed-rate monthly repayment to the consolidation loans lender instead of multiple monthly repayments.

It may help you save money you’d spend on interest with multiple creditors. You’ll also get a reduced repayment amount that frees up your finances for other bills and a set repayment schedule for the entire loan period for easier budgeting.

You don’t have to balance several debts each month or borrow from one lender to pay the next with debt consolidation.

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Suitability Of Debt Consolidation Loans

You have to consider whether debt consolidation loans are suitable for you, depending on your circumstances.

It’s right for you if you’re having trouble paying off multiple high-interest debts and you need a debt solution to get you out of the monthly panic and stress of trying to make ends meet.

A consolidation loan will make managing your finances much more effortless. It’s only suitable if the loan amount puts you in a better financial situation. Before taking out a debt consolidation loan, ensure you review your existing debts i.e interest rates, terms, balances etc.

Debt consolidation loans may be suitable if you don’t see a way out of multiple mounting debts, need to reduce monthly repayments, and get extra cash flow and control of your finances.

Even with a bad or poor credit history, many understanding lenders in the UK may help you acquire a debt consolidation loan provided you can afford repayments and are eligible.

Debt consolidation loans for bad credit borrowers may feature capped loan amounts or higher interest rates to reflect the higher lender risk.

Related quick help guides:

Eligibility Criteria for Debt Consolidation Loans

Although each lender will have their criteria, some of the essential criteria considered include:

You’re at least 18 years old.
You’re a permanent UK resident.
You can prove regular income or are employed.
You’re not bankrupt and haven’t applied for bankruptcy.

Advantages of Debt Consolidation Loans

You need to consider the different pros and cons of debt consolidation loans to make an informed decision. These include:

Reduced And Easy To Manage Monthly Payments

When you consolidate your debts, you get a reduced monthly repayment to one lender instead of struggling to repay different amounts to different creditors. The fixed monthly payment makes it easier to budget than various debts with different rates and repayment dates.

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Easier To Get Out Of Debt

A debt consolidation loan features a single rate of interest that can make it easier to clear your debts sooner. With multiple loans with varying interest rates, most of your repayments go to servicing the interest instead of reducing your balance.

Peace Of Mind

The weight of multiple debts can drain you mentally and physically. It allows you to pay off all your existing debts and only deal with one lender with a debt consolidation loan.

Extended Repayment Period

Debt consolidation loans allow you to repay for longer, which reduces your monthly expenses. You’ll no longer have to worry about missing repayments or the mounting charges of short-term loans.

Disadvantages of Debt Consolidation Loans

Repayments May Not Reduce

Depending on how much you’re currently repaying and over what period, a debt consolidation loan may not reduce your repayments. Additionally, it will not erase your debts. It’s more like a new payment plan and not a form of debt settlement or relief.

You May End Up Paying More Overall

The amount repaid at the end of the term may be higher than the previous individual payments with a more extended repayment period. Therefore, you have to ensure a more prolonged period guarantees you peace of mind, and you can afford to make the repayments.

Considerations When Applying for Debt Consolidation Loans

Things to consider before or when applying for a debt consolidation loan include:

Repayment Cost

You need to decide whether consolidating your debts is a better option than making individual repayments. You can do this by comparing how much you’re currently paying vs. what you’ll be spending in the new repayment structure of a debt consolidation loan.

Affordability

Ensure you can comfortably make repayments over the chosen period without fail. Review your monthly income and how much goes to necessary expenses to determine what remains for loan repayment.

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Credit Score Impact

Lenders run credit checks when you apply for any credit, which can lower your credit score. Closing debt accounts as you consolidate your debts will also impact your credit rating. However, with debt consolidation loans, the effect on your credit score is only temporary.

Over time it will help you improve your credit score thanks to affordable monthly repayments. As you repay each month, your credit score improves while showing lenders you’re a trustworthy borrower.

Debt Consolidation Loans Final Thoughts

While other debt solutions exist, debt consolidation features less severe consequences. It’s suitable if you’re looking for an extended period to repay and reduced monthly expenses that help you regain sanity and control over your finances.