As the UK economy continues its slow mending process, there are more signs that loan companies are starting to relax their lending criteria slightly and in some cases, actually return to the loan market, as the number of loan products available on the market continues to increase.
One secured loan packaging company, V Loans has just announced that it is extending its range of product providers as it is adding Norton Finance Services to its panel of loan providers for its customers.
V Loans now claims to have one of the widest choices of loan products and providers, from the whole of the secured loan market and is able to provide secured loans for borrowers up to a maximum loan to value of 70 per cent at competitive rates of interest, compared with many of the high street bank secured loan products.
The new range of loan products also means that V loans can now offer loans for buy to let and commercial property, flexible loans which allow overpayments and payment holidays and a limited range of sub prime, or bad credit loans for those borrowers with small County Court Judgements (CCJ’s), or defaults more than two years old.
V Loans only deals with financial intermediaries and loan brokers and this emphasises the need for individuals to seek independent financial advice when looking for a new secured loan, rather than just going to their own bank.
Dave Pinnington, Business Development Manager at V Loans said “It is great news for intermediaries that V Loans now has access to Norton’s Product range. Apart from offering good products and excellent service from out latest lender, this provides yet more evidence that the secured loans market is alive and kicking.”
With the Bank of England Base Rate of interest at an all time low of just 0.5 per cent at the moment and remaining at that level for the past eighteen months, many borrowers are currently enjoying cheap loan repayments and in some cases have become complacent about the cost of their loans.
But a new report from a UK think tank has warned that it is quite possible that the base rate will have to be increased to around 8 per cent within the next two years, if the Bank of England is to stay in control of inflation.
The report from The Policy Exchange warned that although the UK could well suffer a double dip recession, this would be followed by a period of intense growth, which could push inflation up to around 10 per cent, forcing the Bank to increase interest rate on loans in order to combat this.
This could have a crippling effect on the finances of many individuals in the UK with outstanding home owner loans, currently on low loan rates. An increase of 7.5 per cent in interest rates could mean a difference in monthly loan repayments of around £625 per month on a loan of £100,000.
Although many individuals are currently enjoying the extra money in their pockets at the moment due to cheap loan rates, they should focus on repaying as much of their loan debts whilst interest rates are cheap, in order to try and avoid an expensive time in the imminent future.
Andrew Lilico of The Policy Exchange warned that if borrowers did not reduce their loan debts quickly, the Bank of England may be forced to keep interest rates low in order to avoid massive loan defaults.
Whilst this may seem like good news, it would have the eventual effect of pushing inflation up to possibly 20 per cent, with even worse eventual consequences for those with loans.
In the currently ever shrinking world of financial services and loan companies, yet another secured loan provider has been subjected to a management buy out this month.
Gopher Money has just completed the purchase of the secured loan brokerage Creditflex, who provide secured loan sourcing for a large number of financial advisers and loan brokers from across the whole of the secured loan market place.
The three Directors of Gopher Money, Mark Prideaux, Sean Byrne, formerly of the Evolution Consumer Group, which includes the companies: Debt Matters and Creditflex Loans and Mortgages and Chris Birks, formerly of Creditflex loans, have more than 50 years worth of experience in financial services between them and have largely been responsible for building Creditflex into one of the UK’s largest brokerages for secured loans, along with Debt Matters in the personal loan debt management sector.
As the economy of the UK slowly starts to recover and banks and building societies begin to return to offering loans once again, Gopher Money feel that now is an ideal time to develop the secured loan brokerage business, along with offering debt management services for those borrowers struggling with their existing loans.
Gopher Money have developed key links with lending organisations and financial intermediaries and loan brokers and feel that they are now well placed to take full advantage of the improving secured loan market and build the new company into one of the UK’s leading firms for financial services and secured loans within the next twelve months.
Mark Prideaux, Chairman of Gopher Money was extremely positive about the buy out, he said “The Creditflex Loans and Mortgage Ltd business has been through some tough times in recent years. There has never been a better time to invest in the secured loan market place.”
“We are looking to provide a level of service that is unparalleled throughout our industry.”
Just over three years ago, before the credit crunch hit the UK, it was relatively easy for a borrower to be accepted for a new home owner loan, even if they had a history of poor credit on their previous loans.
However, this has changed almost completely as banks and building societies have become extremely cautious about who they are prepared to offer loans to and only those borrowers with a perfect credit history are likely to be accepted for a cheap loan.
A few months ago, however, one lender re entered the sub prime, or bad credit loan market, albeit in a very small way, to help those borrowers who were being rejected by the mainstream banks and building societies despite only having a very slightly adverse credit report.
Kensington Mortgages are a specialist loan company, who were one of the leading lenders in the sub prime, or bad credit loan market prior to the credit crunch and they are one of the first companies who have been brave enough to dip their toe back into the sub prime loan market since.
They have now enhanced their loan products to be able to offer loans to individuals who may be rejected by other lenders. Kensington are prepared to offer loans of up to 70 per cent loan to value for borrowers who may have had minor defaults or County Court Judgements in the past two years, or larger ones which are now more than two years old.
Kensington have also increased their maximum loan to value and reduced rates on certain products and say that they are prepared to look at all cases on an individual basis, rather than use automated underwriting processes.
Charles Morley of Kensington said “These enhancements to the criteria on our residential products will help even more of those customers who have been left out in the cold by mainstream lenders, find a mortgage to suit their circumstances.”
Times are particularly difficult financially for many individuals in the UK at the moment. Large loan and credit card debts and a reduced income, coupled with the increasing cost of day to day living, have placed an unmanageable strain on a large number of family’s finances.
Despite this, a large proportion of these individuals are not shopping around for the best deals of their financial products, according to a new survey conducted by Gocompare.com and as a result of this, end up paying out considerably more each month than they actually need to.
According to the survey, around 27 per cent of consumers have not switched any of their financial products over the course of the past twelve months. This would include shopping around for a cheaper home owner loan or mortgage, as well as finding the cheapest car insurance, gas and electric provider, or a cheap loan option to consolidate their existing personal loan and card debts.
The survey found that somewhere in the region of 32 million people had not even checked their personal loans and other financial products since taking them out, to see if they could possibly obtain a cheaper rate.
41 per cent of those interviewed said that they were feeling worse off financially than they were twelve months ago and a quarter said that they needed to make significant cuts in their spending, yet many of these had not considered looking for a cheaper loan, or insurance products.
In these difficult economic times, many people wrongly believe that they already have the best products available and it is not worth looking for a cheaper home owner loan, for example, due to a lack of affordable products in the market place.
John Miles of Gocompare.com said “You could make yourself hundreds of pounds a year better off by taking control of your finances and regularly comparing your financial products.”