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20 Feb, 2008


Natalie Martin, editor of Mortgagedistributor.co.uk
Date: 20-Feb-2008

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 MoneyExpert.com.
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 2007.

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 serious consideration."

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.

       
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