They have certainly gone out of fashion over the last two years, but secured loans are still a valuable, viable option for plenty of homeowners looking to safely control their debts.

A secured loan is a loan on top of your mortgage, sometimes called a second mortgage. In the past they were commonplace and many people took them out while credit was cheap and spending was easy.

But now, in the wake of the deepest recession in modern times, secured loan lending has all but stopped. Most lenders thought it too risky to offer people even more credit on top of what they already had to handle debts. Also, many people became repossessed or at least got into financial difficulties thanks to having an extra loan on top of their mortgage.

But things have changed in two years. People are much more realisitic about borrowing, less people are spending beyond their means and more people want to get serious and sensible about their debt management.

That's why secured loans are still a viable option. There are still lenders out there who will happily lend to people who want to use the financial products to consolidate their unsecured debts and have a plan to pay off the secured loan in a timely manner.

But those lenders will only offer people a second mortgage if they have a water-tight plan. They will only lend to them if their application is impeccable and they will only lend after the borrower has spoken to a mortgage expert. In the wake of the financial crisis, the watchword is caution and safety, but if you can prove both then a secured loan lender may be happy to help you consolidate your debts and safely manage your money.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

There is no doubt that secured lending has taken a battering in the credit crunch, with most lenders exiting the market thanks to a lack of funding and an overall aversion to risk – but there are alternatives.

Where once people could seek out a second mortgage to consolidate debt, for investment or even to reinvest back into their home, now they must face a choice of a few secured loan lenders who are offering just a handful of deals to only the best customers.

But if you need a lump sum to consolidate some of your debts, to maybe invest in a new business, to help your children or to even improve your home itself where can you turn?

One option is offset account mortgages. These are deals where essentially you are given a huge overdraft, secured on your property. So you pay off the overdraft as you would a bank overdraft, paying less in interest as you pay off more of the debt. You can also increase the overdraft past the initial figure, allowing you to pay of unsecured debt or to pay for repairs, renovations or extensions to your home also. This is a secure and sensible alternative to secured loans and one that will see you paying out a whole lot less than a personal loan.

You could also take out a remortgage, increasing your home loan. This a a very traditional way of raising cash, taking advantage of any rise in your home's worth. This has limited options in these tough mortgage times, but there are still some good remortgage products and a lot of equity in people's homes.

There is also, for older borrowers, equity release. One form of this is called home reversion; this is a form of secured borrowing where the lender takes a lump from your home and then owns that part of your home, until you die. There are also lifetime mortgages, where you take out a large mortgage for the rest of your life which then offers withdrawals like a bank account. These loans are not perfect for everyone, but they are a valid and safe form of secured lending.

If you need cash from your home, there are options. Talk to a mortgage adviser today to see what you can do with your home's equity today.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

If you are considering any sort of borrowing this year, the most important thing to make sure of is your credit rating – the key to borrowing success.

David Black, principal consultant of banking at Defaqto says: "The best loan deals are restricted to those with good credit ratings. Personal pricing or ‘risk based pricing' is taking a real hold in the market so, as an individual's credit worthiness deteriorates it becomes increasingly difficult and, when available, more expensive to borrow."

To check your credit you can go to one of the three UK credit agencies – Experian, Equifax or Callcredit – and pay a small fee to see exactly what the lenders see.

Black adds: "In essence lenders consider many aspects when deciding whether, and if so, how much and at what rate, to lend. An individual's credit report, employment and property status, affordability, indebtedness, financial behaviour and usage are all part of the mix in the lender's decision making process. Many providers concentrate the majority of their lending on existing customers and a ‘cautious approach to lending' is becoming an increasingly commonly heard phrase. Existing customers are not immune from this process as lenders will also monitor their creditworthiness."

Talk to your mortgage adviser about your score and your potential. They will be able to give you the low down on what you can get and how much it will cost you. They will also give you tips and hints which could help you increase your score, and increase your chances of borrowing success.

Black concludes: "Lenders are understandably selective about who they will lend to and turn down many applicants. Of those to whom they're willing to lend typically two-thirds should be offered the advertised loan rate. The remaining one-third may get offered a loan facility at a higher rate. Another factor to consider is that the borrower may not be able to borrow as much as they want."

SOURCE: Defaqto, 21/05/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

It's another holiday and another time where you could spend more than you can afford – we all do it – but if you are doing it on your credit card it might be time to reassess.

Over the last few years you probably couldn't open your door due to the sheer number of requests for credit cards – 0% APR, free for a year, free balance transfers, limits of thousands of pounds – it was literally free money landing on your doorstep.

And you could always afford the cards, because you knew when the time came you could either transfer your balance onto another card, or simply use this time as an opportunity to refinance your home and consolidate your debts.

But the party is over, and the hangover is setting in. People who used to live on credit are finding that their overdrafts and credit limits are being severely reduced, and people who just looked to a remortgage as a means of consolidation are finding that they are being turned down for home finance.

So if you haven't yet stopped living on your credit card, it might be time to rethink. Every time you use your plastic, your credit score is deteriorating and you are taking one step back from financial security. There is little chance of getting instant finance or extensions of credit limits. Now is the time to take sensible action.

This has to start with good financial advice. Go and see an adviser and lay it all out on the table: your spending habits, your debts and your financial problems. This might seem daunting but it is the only way you can stop living on credit and begin saving, planning and repaying.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

According to the Government, a total of 46,750 properties in the UK were repossessed during 2008, which means thousands of homeowners and mortgage lenders lost out: because repossession is bad news for everyone.

The Financial Services Authority, the Government's finance watchdog, has reported a sharp increase of 68% in the number of properties repossessed in 2008 compared with 2007. The regulator’s results also showed a rise in the number of borrowers falling into arrears, up 31% from 2007 to 377,000 at the end of 2008. The number of properties being taken into possession during Q4 2008 was slightly lower than it had been over the previous quarter, but this was still 60% up on Q4 2007.

Roderick Logan, analyst at Datamonitor says: “For borrowers it means losing one’s home and could mean moving to fairly squalid living conditions. For lenders, taking possession of a property is likely to be followed quickly by an auction, where prices are likely to remain below the estimated market value as bidders are looking to make a profit and lenders will have no choice but to sell.

"For the government, there is the political aspect of families losing their homes and the negative press generated if they are perceived to be standing by and allowing it to happen. This has resulted in a raft of government initiatives that are being rolled out to help those borrowers deemed to be most at risk."

So this is bad news for everyone. So everyone needs to work together to avoid it. And this starts with you, the homeowner. If you are struggling with unsecured debts and bills, you need to talk to your adviser as soon as you can because missing bill payments should be the red alert warning sign. You should also talk to your lender and any local help services available to you, like Citizen's Advice.

Just do something. Repossession is the worst thing that can happen to a homeowner, so don't let it happen to you and act before it's too late – no one wants to see you repossessed.

SOURCE: Datamonitor, FSA, 25/03/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

The Government has set out plans to regulate the advice and the sales of secured loans – a move which has been welcomed by many.

Right now there is no regulation of secured loans, unlike for mortgages, pensions and investments. The advisers do not have to be watched by the Financial Services Authority and neither do the lenders. This means if something goes wrong, and someone thinks they have been wrongly sold a secured loan, maybe nothing can be done by the authorities.

There is some people watching over secured loans: the Office of Fair Trading makes sure the sector broadly does what it should, but there are still holes so the Government wants to make sure things are watertight by ensuring the FSA look at secured loans as they would mortgages.

Robert Sinclair, director of the Association of Finance Brokers, says: "We fully support this announcement as we have long been calling for an alternative regulatory regime under FSA. This would benefit intermediaries, lenders and consumers."

You may have taken out a secured loan in the past, or you may be planning to take one out in the near future and knew nothing about the regulation of the industry – but it's something you should always be aware of. Regulation means protection and it means quality – without it you are always at risk.

So even though the secured loan market isn't regulated, make sure you deal with an adviser who is. Look for the FSA REGISTERED note on their website or their literature. Even ask them if they are authorised as a legal financial adviser – because that means honesty, quality and someone you can rely on.

SOURCE: AFB, 25/03/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

A debt management provider has reported a huge rise in unsecured debt, taken out by desperate people trying to get by during the recession.

EuroDebt reports that unsecured debt for homeowners rose to £38,683.33 in December 2008 from £37.087.36 in December 2007 – that's, on average, another £1000 of unsecured debt, with ever-rising rates which continue to cripple many people financially.

Kevin Still, director of EuroDebt, says: “We have seen a significant shift in the number of clients who are home owners looking for help from debt management in the last six months. The increase in the average level of unsecured debt for home owners who signed up to our debt management plan is also a concern.

“This is highly indicative of the spiralling debt that families are facing, particularly with the spectre of job losses or loss of income making it hard to see how they can stay on top. Clearly many people are struggling under the current financial pressures, making it more important than ever that individuals take stock of their situation before it reaches a critical point.”

Unsecured debt is dangerous, simply. It has rates far beyond any secured forms of finance, it destroys credit scores and it only puts off the inevitable, rather than giving real answers. If you think you can only get by with a personal loan or another credit card, talk to a financial adviser as soon as you can. There are alternatives to being weighed down by costly, unhelpful unsecured debts.

SOURCE: EuroDebt, 20/02/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

New research by CreditExpert.co.uk shows that one in five Britons are keeping their money worries secret from their partners – up to £30bn worth of hidden debt.

And it’s not just undisclosed debt; 3.2 million of Britons currently in a relationship admit to having a ‘secret’ bank account that they keep from their other half.

Thirteen per cent do not own up to their current partner about the amount of credit or store cards they hold and 15% of British adults currently in a relationship keep information about their bonus or level of earnings from their partner.

Shame and embarrassment appear to be the main reasons for people holding back about financial matters with one in ten admitting they are ashamed of the state of their finances.

Darryl Bowman, director of CreditExpert.co.uk, says: “Couples should be honest about money, particularly if you are already financially linked and if you plan to have joint accounts in the future.”

If you are ashamed of your finances and don't know where to turn, talk to a broker. It might be hard talking to your partner, but talking to an impartial professional might make things a lot easier and a lot clearer. You also probably have less to worry about than you think – a good adviser will do all they can to source the best financial options for you, and your partner.

SOURCE: CreditExpert, 25/02/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

Nearly a third of Brits are worried they won't have enough money in the next five years to cover the costs of their domestic bills.

Research on behalf of Saga Savings has revealed that pressure to save for ‘rainy days' has become more acute, with worries about increased day to day bills and redundancy fears causing many Brits to think hard about their financial situation.

However, whilst the majority of people are currently spending less because their disposable income has diminished, one in eight are burying their head in the sand and don't even want to think about the financial future. A third of Britons are failing to take heed of their own concerns about their finances and haven't changed their spending and saving patterns since the onset of the credit crunch.

The worst thing to do is to bury your head in the sands – it's ignoring the problem and making you blind to the solutions. And there are solutions. If you are a homeowners there is no reason why you shouldn't be able to meet bills now and in the future: it's just down to using what you have.

Talk to a financial adviser and see what you options are, where your strengths lie and how to make the most of them. You may be surprised to find how much you have tied up in your home and even more surprised to find out how easy and cheap it may be to unlock some of that equity to consolidate debt, to shrink outgoings and to generally make your life a little bit easier.

SOURCE: Saga, 20/02/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

Almost one in three people in Great Britain expects a drop in disposable income this year either through salary cuts or increased costs as the effects of the recession take hold, meaning more people may have to utilise secured credit.

New research from Virgin Money shows 29% of adults expect their income to fall over the next three months and the next 12 months. It also revealed an alarming lack of confidence in consumers' ability to pay household bills – even worse, one in 10 are not confident they can keep up mortgage and insurance payments and one in five are pessimistic about being able to afford new clothes.

Rob Clifford, UK managing director of Virgin Money says: "The economic outlook may look bleak and consumers are now familiar with harbingers of doom on a daily basis."

If you are having trouble paying for the essentials, talk to a broker and see if you can get hold of some secured credit to consolidate debt and bring your outgoings down. It's quick, it's simple and if it's planned right it shouldn't have any long-term consequences.

There is nothing wrong with struggling financially, but there is something wrong if you let it get the better of you. Don't avoid the issue and don't let it ruin every part of your life – nip it in the bud and begin getting a bit more confident about your financial future.

Clifford adds: "There is light at the end of the tunnel. Although there are signs of recession everywhere but there are also signs for optimism."

SOURCE: Virgin Money, 17/02/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.