Andy Moody, managing director, Loanoptions.co.uk
There are a few bright spots on the horizon at present and talking to intermediaries and lenders, the only thing that everyone can agree on is that no one from the coalface to the boardroom has a clue when it is going to end.
Being an optimist by nature, I naturally look for opportunities and while so much depends long term on the availability of funds, there are certain things that are beyond our immediate control, so forgive me for waving my flag for the much maligned Consumer Credit Act.
I have been struck by the fact that the changes to the CCA as far as secured loans are concerned have really levelled the playing field when comparing mortgages to secured loans where clients are looking to raise capital.
Of course, for those of you with an ironic state of mind, it might seem amusing that it should come at such a time as this, but the journey from unloved and despised ‘rip off’ product, demonised by so many, to the totally transparent and thoroughly 21st century financial product of today is now surely complete!
For that we should all be very pleased because with the changes, there can be no argument that in many circumstances secured loans are better advice than remortgaging or taking on a further advance.
I don’t need to tell you how difficult it is to find a decent remortgage without the customer paying through the nose for application fees, not forgetting the valuation fees and conveyancing.
Now that secured loans are all covered by the new CCA, there is added protection for clients through the unique cooling off period which allows time for clients to consider the deal without pressure as well as an almost universal maximum early redemption penalty of two months interest for all secured loans.
Along with the huge advantage of not carrying any upfront fees, which are such a talking point on the mortgage side at present, secured loans present a logical alternative and should in many circumstances now be considered as a first choice for advice when clients are capital raising.
The main areas where this is already self evident include where clients are tied in to their first charge lenders, customers have a deteriorating credit record since taking out their existing mortgage, those wishing to repay their new borrowing within a short period of time or anyone looking to have access to funds in a timeframe which remortgaging cannot match are all candidates better served by secured loans.
So with all the doom and gloom, let’s at least raise a glass to toast the ‘new’ secured loan, which I have really no doubt deserves its place in every adviser’s armoury of advice.