How to Improve Your Chances of Approval with Secured Loans

If you are applying for any loan, you want to be sure that the lender will approve your loan, and this also applies to secured loans. If you take a few simple steps you can vastly increase your chances of getting the loan you want. In this article we advise you on how to get approval for your secured loan.

It is very important to assess your situation before you apply for a secured loan. Not only is it a waste of time to have your loan application refused, it can also impact negatively on your credit rating. In fact, the first thing you should do if you are thinking about applying for a secured loan is to check to see whether you have a good credit rating. The two main credit reference agencies in the UK are Experian and Equifax. These will have detailed information on your credit history and will be able to tell you the state of your credit rating.

If you do have a bad credit rating this will limit you in the secured loans products and the amount of money you can apply for. You should still be able to get a secured loan, but it may cost you more.

Once you have assessed your credit rating you should have your home revalued to estimate its current worth. You should also calculate how much of your mortgage you have paid off as this is a deciding factor in how much you can borrow. If at all possible do not aim too high. Some lenders offer secured loans up to 125 per cent of your home's value less the outstanding amount on your mortgage. You will have a much greater chance of having your application accepted if you seek to borrow 100 per cent of your home's value, or less. For example, if your home is worth £250,000 and you have £100,000 outstanding on your mortgage, try not to apply for a secured loan of over £150,000. If you have a bad credit rating you should aim much lower than this. Your current income will also have a bearing on how much lenders will be willing to offer you.

If you are approaching a potential lender directly be up front with them. Present your circumstances and state how much you want to borrow. Ask them for an opinion on whether you will qualify, but make it clear that you only want an opinion and do not want a credit check carried out yet. You will not get a definitive answer, but you should get a good indication of how much you can apply for.

Another alternative is to find a good secured loan broker or independent financial adviser to help you out. Most will have years of experience in arranging secured loans so should be able to tell you how much you can borrow and how to avoid any pitfalls. Many will also have good negotiating power with lenders so could be able to find you a good deal.

The best way improve your chances of approval with secured loans is to do your homework before you begin your search.

You may find other loan articles on Money Beacon, such as 'What are the Pros and Cons of a Secured Loan', useful input as you decide about getting a secured loan.