Secured loans - how to get a lower rate - Part 2
Secured loans - your property
Your property is the security that the secured loan lender has. If all goes wrong and you stop paying and communicating with the secured loan lender then eventually he will reposes your property (although he will not want to as it is creates another set of problems for him).
So, putting the above cautionary note aside, you are putting up your property as security for the loan. You are only doing this because it benefits you and you probably fall into one of the following categories:
- A lower rate than other unsecured loans offer
- A larger loan than is available through other financial sources
- You want a loan but your employment is questionable or you are self employed
- You have missed a few payments on some credit and the loan rates you are being offered from other sources are unpalatable
- Your credit is poor and you need to put up security to get a loan
The secured loan LTV (loan to value) is one of the major calculations that will effect the rate you are offered. It is simple to work out: you take your current outstanding mortgage, add to that the secured loan you are applying for and divide it by the current value of your property. The lower the percentage the better rate you should get.
So, if you want a lower rate then maximizing the properties value is one of the best ways to go about it. It might take a little bit of time but you could be paying for the secured loan for anything from 5 years to 25 years so the extra bit of effort could save you a lot of money in the long term.
Secured loans - property rule 1
You will almost certainly have a valuer come round to have a look at your property towards the end of your secured loan application.
Valuing property is not a science but an opinion and in this case the the persons whose opinion counts is the valuers that you have coming round. You don't know if he has spent most of the day sitting in a traffic jam, had an argument with his children or forgotten his anniversary and what is more you can't do a thing about it.
What you can do is be friendly and offer him a drink and make sure you have allocated time for him. Go round the property and point out any improvements you have made and are going to make.
Valuers like to be told that the property is going to be improved as it lessens their risk of getting sued by the secured loan lender in case they value the property wrongly.
Secured loans - property rule 2
Before the valuer gets to your property make sure it is looking its best. A small bit of effort will add thousands to your valuation if the property looks well kept rather than run down.
First impressions count so make sure the front and entrance hall is spotless, try and put any junk away to make the rooms look bigger and also try to finish those jobs that were half started and never quite completed.
Secured loans - property rule 3
As previously stated, the property value is an opinion so you need to make sure that the valuers opinion is the correct one. All valuers will contact local estate agents to see what is selling in the market near your property.
It would be to your benefit if you contacted the estate agents and got comparable properties that are on the market and recent sales. You can then decide which of your collection you wish to give the valuer (or you can send them on to your broker but this is not quite as good as giving them to the valuer).
Human nature being what it is, your comparables will probably end up in the valuers file and he will take these into account when valuing your property.
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