By opting to borrow money via a secured or homeowner loan arrangement you are securing the loan using what is frequently an individual’s most precious asset, their home. Understandably then, it’s vital to understand the terms of the loan, your obligations, the pre-set conditions and your rights before you sign any form of contract. A working knowledge of common industry terms can also be beneficial and we’ve explained a few of the more basic ones in this post.
The Consumer Credit Act
The Consumer Credit Act of 1974 does cover some forms of secured loans, they do not necessarily cover all forms of this loan though and so it’s vital to check whether your personal situation is covered by this act – reading online it seems that for loans of more than £25,000 the loan is not covered by this. For amounts larger than this, the loan is therefore unregulated and the lenders are able to take your home if you do not keep up with repayments. For this reason it is absolutely vital that you understand the terms and conditions of your particular agreement with your chosen lender prior to signing anything as this will be legally binding once done so. As an additional note if you are covered under the Consumer Credit Act the lender must legally give a 7 day cooling off period before the contract is enforced.
Also related to this and in the press a lot recently is PPI (payment protection insurance). These types of insurance policies are issued by the lender and protect the borrower’s monthly payments against a number of circumstances including sickness and unemployment. Again, it pays to do your research with this as a number have been mis-sold in recent years.
This is another point for which you need to check and be aware of the terms in your specific agreement with the lender as some lenders do charge for the early settlement of a loan, likewise though some don’t. An interchangeable term for early settlements is an early redemption fee so look out for this in your terms and conditions.
The Repayment Rate
The rate at which you repay your loan is unsurprisingly dependent on a variety of factors. These include the amount of equity you have in your property, your credit history and your ability to pay the loan back. Repayment can be very confusing and it’s important to get clarity on your particular repayment package before signing any agreement, think ahead too for any pending payments you may be having to make in the near future or standing orders that may be commencing that could affect your ability to meet your repayments. Loans and borrowing are stressful, do your best to ensure that nothing is going to crop up in future and hinder your ability to make the repayments on your loan.
The latest news and legislation surrounding loans and borrowing changes frequently so it’s a good idea to stay on top of this and what’s happening in the industry. Media coverage for this sort of business is vast and the BBC and Financial Times both do well in providing useful and understandable information relevant to the general public. Mortgage news, interest rates and new rules, rights and regulations are always coming about and a working knowledge of this and any recent changes can help you to understand the mechanics, terms and conditions in your particular loan arrangement.
For more information and to see if a type of secured loan can fit your financial needs click through to www.appleloans.co.uk.