The number of secured loans and mortgages granted in March has increased significantly, according to figures released today.
Over the last few months, the availability of secured finance has been severely curtailed, making it difficult to purchase a property, without a large deposit. It has been almost impossible to raise funds on the security of your house for debt consolidation, or for some other major purchase.
Since the onset of the credit crunch, there has been an increase in the number of UK consumers in need of debt advice, struggling to maintain payments on all of their commitments. Before the recession, most people opted for a debt consolidation loan as a way to reduce their overall monthly outgoings. Now that the recession is upon us, property prices have been falling and unemployment is on the way up, lenders have been increasingly reluctant to part with money on the security of a house that may be going down in value.
This has left many individuals, which are struggling with serious debt problems, having to look at other options such as debt management plans Trust Deeds, or an IVA. These debt solutions are a means of gathering all of your unsecured commitments together, and consolidating them into a reduced single payment. Debt advice specialists have been swamped with enquiries from overcommitted individuals, in need of alternative methods of debt relief and IVA advice.
Now that the secured loan and mortgage markets seem to be improving, borrowing money as a means of debt consolidation, may now offer consumers another choice.
According to the CML, Council of Mortgage Lenders, more than 30,000 home loans were granted in March, which is a 29% increase over February, although still a third down on the same time last year.
The Council said that the position was tough for people that were unable to put down some form of deposit. Lenders were not likely to lend 100% on the value of a house, nor were they likely to give a secured consolidation loan equal to the amount of the equity value in a property. The majority of lenders are only prepared to lend up to 90% of the value of the security, and this does not suit everybody, particularly those individuals that have seen a decline in the price of their house over the last 12 months.
