Category Archives: News

Payday loans for businesses – a new loan product

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The PayDay loan firm Wonga is now offering businesses loans of £3,000-£10,000 available within 30 minutes and repayable over 1 to 52 weeks. Interest rates start at 0.3% per week (approx 17% APR) and go as high as 2% per week (approx 300% APR) while loans will be repaid in weekly instalments. There will also be a variable application fee.

 

To qualify for one of these loans currently, a business must be either a limited liability company or a limited liability partnership, be at least 3 years old and have sales of at least £20,000 per month. Wonga do say however that they hope to broaden these criteria over time.

 

As part of their PayDay Loan business Wonga have developed a complex algorithm that allows them assess the risk of an applicant in a matter of minutes. Now they have extended this procedure to cover businesses business. For individual PayDay loan applicants they say they reject about two-thirds of enquiries so it will be interesting to see how these statistics evolve with these new “payday loans for businesses”.

 

Of course, mention PayDay Loans or Wonga and there is likely to be some quite extreme reactions. This industry, and in particularly this company, have been vilified in the press for the high APR associated with their PayDay Loans. They respond saying that APR is not necessarily a fair yardstick for such short term loans and that they are meeting a demand that is clearly evidenced by popularity of such loans. Indeed, they also point out that were there not a PayDay loan option, many people would be forced into the hands on underground Money Lenders which, as a completely unregulated business, is a far worse option. It is also worth noting that in independent customer surveys, over 80% of their customers say they would recommend them.

 

From our perspective we’ve always held the same view: any extra option of finance to individuals or businesses is always welcome. As with all things though, one needs to make an informed and measured decision. Even those forms of finance perceived as much more benign, such as mortgages or personal loans, can be destructive if utilised imprudently or rashly. This loan product, like others, is suitable for certain borrowers in certain situations and a careful assessment of all finance options is required as it won’t be suitable for everyone.

 

There are, of course, other options. For example, via our connection with Funding Circle, we at Choice Loans can offer businesses with 2 years’ trading history unsecured loans of up to £100,000 over 5 years with no ERCs (Early Repayment Charges). For newer businesses in the B2B space we can arrange factoring deals and for those looking to purchase plant, vehicles or equipment we can also arrange asset finance or lease finance. To discuss any of these options just give one of our Advisers a call on 0845 1260350

Retirement Mortgage for over 60s but not an Equity Release

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A UK Building Society has for the first time launched a new mortgage aimed at those over 65 that isn’t an Equity Release scheme. It allows eligible applicants borrow up to 50% LTV (max £250,000) over a period up to 25 years and we have access to this limited mortgage product.

 

These are the details of this mortgage:

  • Applicants must be at least 65 years of age to apply. There is no upper age limit
  • Up to 50% LTV is available but there must be at least £150,000 equity remaining in the property on completion
  • The maximum loan amount is £250,000
  • The rate is 5.74% variable
  • Interest Only options are also available
  • Terms of up to 25 years are available but if you repay anytime after the first year there are no Early Repayment Charges
  • Income must be provable (whether earned, pension, rental, investment etc.) and within normal income multiples. Income support from immediate family members can also be considered
  • The applicant must be the owner occupier of the property being offered as security
  • There is a £299 application fee and a £1,495 Lender fee added on completion
  • A standard Legal fees package is available at £370 all inclusive on remortgages (subject to terms and conditions)
  • The minimum applicant age is 65 and family members need to be informed of the mortgage details by solicitors

 

This mortgage product has been specifically designed for those already in retirement but who are still earning an income and to whom the mortgage market had previously been restricted to Equity release. So far the lender has shown great flexibility in terms of acceptable income and LTVs (indeed they originally launched this retirement mortgage at a LTV of 40% but subsequently increased it as demand for the product grew!).

 

Through our affiliation with a regulated mortgage adviser Choice Loans is able to offer this product to our clients. To apply either fill in the mortgage enquiry form on our mortgage page here or call us on 0845 1260350

Guarantor Loans with Tenants as Guarantors

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A new product has been launched this month which allows a Borrower take a Guarantor loan of up to £1,000 but does not require the Guarantor to be a Home Owner. This is the first Guarantor loan product in the UK since the credit crisis began that foregoes the need for the Guarantor to be a home owner and allows the guarantee to be based solely on the Guarantor’s credit rating. Representative APRs for the loans will be at 53.8%

 

Up until now the existing Guarantor Loan products in the market allow up to £5,000 to be borrowed but required the Guarantor to be aged 25-72, live and own a home in Great Britain and be of sound credit standing. This requirement for the Guarantor to be a Home Owner is what has scuppered many loan applications previously and there was simply no option for a Borrower to use a tenanted Guarantor. Though the maximum loan amount is capped at £1,000 this new loan product will allow Borrowers leverage off the good credit standing of other family members, friends or work colleagues to get credit themselves and in making their repayment, rebuild their own credit record. It is another step in the ‘normalisation’ of the lending market and is to be welcomed as it opens the option of credit to a new raft of previously disenfranchised Borrowers.

 

To apply for a £1,000 Guarantor Loan using a Tenant as a Guarantor (or a loan of up to £5,000 using a Home Owner as a Guarantor), please go to our simple Guarantor Loan application form here http://www.choice-loans.co.uk/guarantor-loan.php

New Debt Management guidance from the OFT

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The OFT has published new guidance as to the standards it expects from businesses offering debt management advice or credit repair services to the public. Specifically they have issued example of “unfair or improper practises” which if a businesses is found to be engaging in them could lead to them losing their Consumer Credit License.

 

The practices that they consider to be “unfair or improper” include:

  • Sending unsolicited texts or email messages
  • Providing inappropriate financial incentives to staff offering Debt Management Services which may encourage them to promote the wrong products for their own financial gain
  • Making false or misleading statements about the status of their business, for example, giving the impression from websites that they operate as a charity or government body

 

There is also a requirement on businesses to refer consumers to ‘not-for-profit’ advisory services in certain circumstances and to have measures in place to deal with those who may be most vulnerable such as the elderly or those of limited mental capacity.

 

This latest guidance is a follow on from the review of the sector conducted in 2010 which revealed widespread concerns with the advertising and marketing practises of the industry and the calibre of advice given. David Fisher, Director of the OFT’s Consumer Credit Group, said:

 

‘This new guidance clearly sets out the standards we expect from debt management businesses. All too often it may be particularly vulnerable consumers who fall victim to poor quality debt advice and we will continue to take action against businesses that fail to follow our guidance.’

 

While this extra guidance and any measure to improve standards in the industry has to be welcomed we do also note with concern that it appears to be proving a little difficult to implement. We are aware, for example, the the process of getting a Consumer Credit License has become much more arduous to the point where the system seems to be seizing up. One firm that applied last October 2011 to extend their CCL from Category C to also include Categories D & E (those required for firms handling Debt Management Services enquiries) were recently told that the process may take until February 2014 to resolve!

 

While the industry has had some poor performers let it down and the OFT are right to take a considered view in issuing licenses, the fact remains that those who perform well in this industry do provide a good service and to prevent others from joining the market on what appears to be a ‘guilty until proven innocent’ will not serve the public or the industry well in the long run. We do hope the OFT gets to grips with these new guidelines again as soon as possible, speeds up the CCL issuing process and the market can return to more efficient service-oriented operation.

Lowest rate Secured Loan available from 6.9%

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Shawbrook bank have today announced that they are dropping the rate on their Secured Loans to 6.9% – this is the lowest rate the market has seen since the credit crunch began and is available on the Platinum Secured Loan products.

 

In further good news for the loan market, Shawbrook also announced that as well as this 1% drop in loan rates for employed applicants to their Platinum plan, they are also increasing the maximum loan size from £100,000 to £125,000. However the minimum allowable Risk Score has been increased from 425 to 450 and the Debt-To-Income Ratio (DTIR) is now 42.5%

 

On their Plus plan they have also made changes too with rates increasing on the 80% and 85% plans, the minimum Risk Score increasing to 425 and Advance size on the 72-75% LTV plans lmited to £40,000.

 

Nevertheless the headline for the Secured Loan market is good news as this new low interest rate will continue to fuel the competition that has been growing in this sector for the past few months. With Unsecured loan rates about to go below the 6% mark from HIgh Street lenders the trend is certainly positive and hopefully reflects and ongoing normalisation of lending conditions for consumers in the UK

Unsecured loans for Professionals up to £25,000 available

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We’re pleased to announce that through a new partnership with one of our specialist private lending institutions we are able to offer unsecured loans to professionals (doctors, lawyers, dentists etc) in up to £25,000 for terms from 1-3 years.

 

Unsecured loans have been a very difficult market for everyone since the credit crunch began. While Homeowners have benefitted from a surge in lending in the Secured Loan market (where even those with poor credit can get loans up to 75% LTV and separately up to £10,000 is available to anyone regardless of LTV but subject to affordability) the Unsecured Loan market has been moribund and open only to those with pristine credit records. At Choice Loans during this time we have been constantly striving to find new lenders to present further Unsecured loan options to our customers and while this new product won’t benefit everyone, it is a promising sign of things beginning to change.

 

The Unsecured loans for Professionals typically have an interest rate of 7-9% (depending on circumstance, of course) and where there is a partnership a larger loan will be considered with a rule of thumb of £25,000 per partner available, again subject to terms and conditions.

 

For this product, please do not apply on our Unsecured Loan page (as this will cause you to apply to our mainstream Lenders) but call us in the office on 0845 1260350

Manager at Bridging Loan Surveyor firm jailed for fraud

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Gavin Sutton from West Houghton, a finance manager working for bridging surveyors Matthews & Goodman has pleaded guilty to fraud and been sentenced to twenty months in jail.

 

It was determined that Sutton, 34, stole £102,000 from his company over a year period by carefully removing £100,000 out of clients’ accounts and transferring it to his own, using his manager’s online password when the manager either went home early or while he was on holidays. He later tried to claim the thirty two transfers were to pay for cleaning expenses and now appears to have spent all the money in a 12 month period.

 

The fraud was only detected after the bridging surveyors, who work with bridging loan companies, computers crashed and the accounts manager had to recover all the data.

 

Sutton claims that the thirty two transfers he made into his account were used for his children, his ex-wife, a holiday and alcohol. He claims to have had a long standing problem with alcohol and had left to company to try and get himself sober.

 

A criminal case will be heard later this year and Sutton has offered to repay the debt, but after consideration it was realised it will take him approximately thirty three years to pay it off.

New Unsecured Loan product up to £25,000 launched

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A new unsecured loan products was launched this week giving Homeowners the option to borrow up to £25,000 at rates from 9.4% – 12.5% APR over periods from 1 to 25 years. The loan is only available through a limited number of brokers but we are pleased to say that Choice Loans will be able to offer it to our clients.

 

The primary requirements are

  • Client must be a homeowner in the UK (though the loan is not secured on the property)
  • Client must be aged 18-75 (at the end of the term)
  • Client must have a minimum income of £10,000 p.a. (2 payslips required or Accountant’s reference for Self Employed)
  • Retirees are accepted with bank statements
  • Those on benefits also accepted with Award letters
  • No Defaults or CCJs in the last 2 years
  • Those in a Debt Management plan or IVA are also eligible depending on their overall profile
  • Client must have a frozen pension pot of at least £20,000 e.g. a pension from a previous employment or a privately funded pension that is no longer being paid into

 

The Unsecured Loan market has been a desolate place for Brokers in the last 13 months since Lloyds Black Horse Finance and CitiFinancial pulled the shutters down on their market activity. In reality the market is in two tiers with the High Street Banks and Supermarkets like M&S or Sainsburys doing the best deals but they a) don’t go via Brokers and b) Require fairly spotless credit records before they consider lending. The tier that Brokers can access is made up of private Lenders who a) charge much higher rates and b) only have marginal more flexibility on credit scores for their successful applicants. In short, if you had any defaults, or even so much as a late payment in some cases, the chances of getting unsecured loan credit was very remote.

 

Guarantor Loans had consequently become quite popular as people were forced to lean on the credit rating of others (Homeowners) to borrow themselves and repair their credit score but this new product offers some extra options to Homeowners who don’t qualify for (or just don’t with to take) a Secured Loan.

 

One other relevant feature is the fact this loan product works on a “lifestyle” underwriting basis which we understand to mean it’s more about where you are now rather than what you have done in the past. For this reason, even clients in a DM program or even with an IVA are still eligible if they meet other criteria and both Employed and Self-Employed (with accounts) people may also apply.

 

To apply contact us direct on 0845 1260350 or complete our online Secured Loan application form

Mortgage Lenders increase Standard Variable Rates

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It’s been flagged for some time now but this weekend it finally happened. Following several months of an increase in LIBORs in the interbank market, the first Lenders have bitten the bullet and passed these increase on to their variable rate customers linked to the Lenders own Standard Variable Rate (SVR). Effective May 1st, Halifax have said they will increase their SVR by 49bp to 3.99% and RBS Offset and One Account holders will also see their SVR rise by 25bp to 4.00%.

 

A Lender’s SVR is the rate against which they peg most of their variable mortgages. back in the good old days when funding markets were more normalised, the SVR generally moved in line with the Bank of England Base Rate though often a little pre-emptively (usually in the case of rate rises!) or with a lag (unsurprisingly when rates were cut!) of a few weeks here or there. Nowadays with the interbank lending market quite stagnant and no one quite sure where the exact medium term borrowing rates are, other than the occasional funding operation from the ECB, the SVR moves more independently from the Bank of England base rate.

 

For some Borrowers this will be an unwelcome surprise. As the Bank of England base rate has stayed at 0.5% – and is forecast to remain there until 2015/6 – they may have thought they were fairly secure in their mortgage payments but the devil is in the detail and while those with mortgages linked directly to the BoE base rate will sleep soundly, those on the Lender’s own SVR are in for a surprise. A 25bp rate increase on a £100,000 mortgage of 15 year term will cost about £24 extra per month.

 

Nevertheless, this does present a small boon to the mortgage broker community who can now step in to help clients find the best remortgage deals to mitigate these rate increases. At Choice Loans we can refer you to one of our panel of Mortgage Advisers who can assist you with your options. Just give us a call on 0845 126 0350

Unsecured Loans for Architects of up to £25,000 available

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This month Choice Loans have forged a partnership with a private Lender to be able to offer Unsecured Loans for Architects of up to £25,000 repayable on a flexible basis over 1-3 years. Rates are variable subject to circumstances and affordability but generall are in the 7-9% range.

 

For partnerships there is also the option of larger amounts with approximately £25,000 per partner available but this is a broad rule of thumb and will, of course, depend on individual circumstances.

 

This Unsecured loan is available to all professionals such a Doctors, Solicitors, Dentists etc and not just Architects.

 

This is not a loan available from High Street banks so we are pleased to be able to add it to our suite of products. Of course, as a Generalist Finance Broker, Choice Loans can also help you with mortgage, Secured Loan or Commercial Loans.

 

For Unsecured Loans for Architects we ask that you call us direct in the office rather than fill in one of our online forms. Our number is 0845 1260350