Rainbow Loans have writen to the best of our ability how to search for the best loan, apply for the lowest interest rate, and what to do if you have bad credit history!
Need a loan over £25,000? If you’re a homeowner or have property in the UK you can apply for a secured home loan. The amount borrowed is subject to an interest charge, and the interest rate applied is known as the Annual Percentage Rate (APR). Generally, it is advisable to compare the APRs of different loan lenders and products as a means of determining how competitive they really are.
It is not unusual for online and high street lenders to offer different APRs depending on the method of application e.g. applications by telephone may receive a higher APR than those done online, so it’s well worth shopping around for the best loan deal online.
If you are looking for a low cost loan, comparing the APR is a good place to start. Lenders do quote interest rates in different ways, and it's worth familiarising yourself with these before you start. A fixed interest rate will stay the same throughout the term of the loan, regardless of any changes in the bank base rate. This means your monthly repayments should always stay the same, allowing you to budget accurately.
A variable interest rate may rise and fall in line with any changes to the bank base rate. This could result in your monthly repayments changing during the term.
In addition, A typical interest rate is an indication of the rate you will be offered as it is the rate that over 66% of successful applicants receive. The exact rate offered to you will be dependent on the loan amount and term and on an assessment of your personal circumstances. A set interest rate is offered to all successful applicants, regardless of the risk they present and the loan amount and term. Although lowest APR is one factor that contributes to a ‘cheap’ loan, you should always pay attention to the small print as any additional costs will be found there.
Some lenders do apply an early settlement charge (also known as a redemption penalty) if the debt is repaid in full before the agreed end date. This can be up to 2 months interest so it pays to check this out before you commit. If you think you'll clear the debt before the end of the term then your best bet will probably be a loan with no early settlement costs, even if the APR is slightly higher. Whatever you decide, you’ll need to do your sums before you sign on the dotted line. Secured homeowner loans are repayable on a monthly basis. If there is a degree of flexibility then the lender may permit over-payments and lump-sum payments, both of which allow you to clear the debt over a shorter time period than first agreed.
If your loan is a truly flexible product then you may also be able to withdraw funds from the account on a rolling basis, providing you stay within your credit limit. Lenders also offer repayment holidays or payment breaks, allowing you to take a break from your monthly repayments either at the start of the loan (known as 'deferred repayment') or at an agreed point during the term of the loan. Interest will continue to accrue on the outstanding balance and this may result in increased monthly payments so your debt is still repaid over the term agreed at the outset.
Getting accepted for a secured homeowner loan can sometimes prove difficult if you’ve got bad credit history, have changed addresses frequently over a period of time, have no previous credit history or are self-employed. There are lenders who can help those who need 'bad credit' loans and those who have difficult personal circumstances. The APR is likely to be higher than that offered by a standard personal loan provider, but the chances of getting accepted are far greater. If you’re a homeowner with ‘bad credit’ or difficult personal circumstances it may be worth considering a secured homeowner loan set against your property or house. Click to compare secured homeowner loans.
