To help you get to grips with secured loans, the following five case studies will help you to decide where and when a secured loan would be practicable than other types of finance. Click on a topic to learn more about it.
Case Study 1 - Adverse Credit
Your customer wishes to re-mortgage to raise extra cash for home improvements, but has an adverse credit rating.
They are looking to borrow £20,000 but an unsecured loan is not an option due to the adverse credit against them. The customer has a first mortgage at high street rates with a major high street building society, but has picked up a couple of CCJ’s since taking out his mortgage. He has 20 years to go on the mortgage.
The property is valued at £200,000
With a mortgage outstanding £100,000
Their existing mortgage payment is £555.83 @ 4.5%
If they re-mortgage to an adverse lender the total new monthly repayment would be £1,158.03 @ 10%
| The client would then have to pay; |
 |
Broker Fee |
£500 - £1,000 |
|
Valuation Fee |
£300 |
|
Solicitor Fee |
£395 |
|
Arrangement Fee |
£300 |
|
Total Fees |
£1,495 - £1,995 |
The customer decides that they are not going to re-mortgage because both the fees and the new mortgage repayment are prohibitive!
The Alternative
Leave the existing mortgage in place
Apply to Click Finance for a £20,000 secured loan.
Advantages to the Clients
No Fees
Mortgage still on high street rates
Same day decision in principle
Quick Pay outs
Advantages to the Introducer
Will earn from a case that was dead
Professional service (satisfied clients will come back for repeat business)
Extra income stream for little or no work
Able to offer best advice
Existing mortgage £555.83
New loan £361.70 17.9% APR
Total monthly outgoings £917.53
Saving client £240.50 monthly and no fees (17.9% APR has been assumed for new loan, which will be the worst case scenario in most cases, and is inclusive of full payment protection cover for the new loan.
Next Page - Case study 2 - Re-mortgage Costs too High
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