20 Feb, 2008
Natalie Martin, editor of
Homeowners in need of a significant cash
advance can now choose from secured loan deals that are even more
competitive than the average unsecured loan rate, says
The independent financial comparison website shows that the
average APR on a £15,000 unsecured loan is around 8.44%
However, borrowers with the option of securing the loan against
their property can get interest rates as low as 5.9%, some 2.5
percentage points cheaper than the average unsecured loan rate on
the market for balances of £15,000.
MoneyExpert.com has seen demand for secured loans increase
significantly in the past six months. The comparison website says
it has seen an 85% increase in homeowner loan applications in the
quarter ending January 2008 compared to the quarter ending October
Sean Gardner, chief executive of MoneyExpert.com, says:
"Historically secured loans were seen as something of a product of
last resort. But these days they are far more attractive to
homeowners who are looking for a competitive rate of interest.
"Whilst these low rates can include an arrangement fee of as much
as £995, the monthly savings to be made by opting for a
homeowner loan can still be substantial.
"The best secured loan deals are actually cheaper than the average
unsecured loan. That coupled with the fact that one in three of us
are worried about our ability to handle our debts means it's an
option that more and more people are now turning to.
"It's fair to say that the majority of secured loan customers are
those who cannot get an unsecured loan. Many are looking to
consolidate debts and perhaps they have a poor credit record. But
that is not to say that a secured loan is inherently bad - home
loans can be a lifeline for the applicant, but they should be taken
on with a degree of caution.
"One thing to be cautious of is lender or broker fees. Some of the
headline interest rates may not include fees which would normally
not apply on an unsecured loan. That said, even with a fee the
lower rates available on homeowner loans make them worthy of
MoneyExpert.com says that even the best unsecured loan deals are
only slightly better than the top secured loans. The cheapest
unsecured loan currently on the market is the 5.54%, available
through Zopa for a loan of only £1,000.