The UK’s largest supplier of secured homeowner loans, Barclays owned Firstplus, is to stop selling loans from August 2008 due to reduced demand.
Firstplus provided secured personal loans or second charge mortgages. These allow homeowners to have a second secured loan in addition to their main mortgage. Firstplus employs more than 450 people at its Cardiff base, around 300 jobs would be lost when it halts business next month.
Secured personal loans can be a useful alternative form of lending. Many secured loans are taken out as the mortgage holder has bad credit and cannot get extra funds from their main mortgage company. Secured loan lenders are much more relaxed about this type of customer and simply increase their rates to reflect the risk. Conversely, taking out a second loan in this situation could be the best thing to do. It avoids placing the whole mortgage plus any extra borrowing on to a bad credit mortgage basis which would dramatically increase the cost of the whole loan.
Secured personal loans are also incredibly fast to set up with money available in just a week. For some, this is the most important aspect when funds are needs double quick.
However, we would suggest speaking with a mortgage broker before jumping in to a secured personal loan as there maybe other options available.