Review of the week: Blackhorse Personal Finance Secured Loan

Published:
06 November 2009
Topic:
News,Money,Loans,Product review

Want to take advantage of the lowest loan rate available in the UK?

Blackhorse Personal Finance is offering a secured loan with a market-leading annual percentage rate (APR) of 7.8% and it's only available through moneysupermarket.com.

But, even though it's the most competitively priced loan available, is it suitable for you?

What's the deal?

Blackhorse Personal Finance, part of the Lloyds Banking Group, is offering new customers a rate of 7.8% - a deal that's exclusive to moneysupermarket.com.
 
Available for loans between £7,500 and £40,000 this rate is currently the lowest in the UK for this type of borrowing and can be taken out over a term of 3 to 10 years.

Once you have applied and are approved for a loan, Blackhorse is giving customers the option to progress their application through the post or through one of their 56 branches. They state that most customers will have a branch within a 30 mile radius of their postcode so in a climate of what seems like never ending postal strikes, this is a viable option if you need to get access to your funds quickly as there is a lot more paper work involved with the processing of a secured loan.       

Most secured loan providers offer rates that are variable meaning that monthly payments could fluctuate. However, the Blackhorse rate is fixed meaning you have the extra peace of mind that your payments will remain the same for the term of the loan.

Any catches?

The key thing about this loan is that it is secured against your property. Not only does this mean it is available solely to homeowners, so you won't qualify if you live in rented accommodation, but also your home is at risk if you fail to keep up with your monthly payments.  

It's also worth pointing out that even if you are a homeowner, it doesn't guarantee that you'll be able to borrow the amount you want. The maximum loan size on a secured loan is often higher than that on an unsecured deal because of the extra security the lender has. In the case of Blackhorse, it will advance up to £40,000 but whether you can borrow that amount will depend on how much equity you have in your house.

Blackhorse requires customers to have an equity stake of at least 20% once their loan and mortgage is taken into account. So, if your mortgage is £120,000 and you are looking to borrow £40,000, your property would have to be worth at least £200,000.

If you are unsure as to how to calculate this figure there is a calculator available on the proceed button featured on the loans page. All you need to know is approximately how much your property is worth, how much is currently outstanding on your mortgage and how much you want to borrow. The calculator will then confirm if you have enough equity in your property to cover the loan amount needed.

In order to apply for the loan you must be at least 25 years of age and have been living in the UK for at least 3 years and as this is secured against your property, you must be a homeowner.

The underwriting process for a secured loan can take a while especially as you will need to have a valuation carried out on your property, before a decision is made. In most cases, this will be a drive-by, or desk-top, valuation so you won't need to pay for a full survey.

Also, this loan is only available to those with excellent credit scores so there is no point in applying unless you have an impeccable credit history. And if you are accepted you may be offered a higher rate than the 7.8% that is advertised. That said, the typical rate, which is offered to at least 66% of successful applicants is 9.9% - significantly lower than many loan rates currently available.

 

Verdict

If you are confident that you will be able to keep up with your monthly payments, this is a deal worth considering.

In a climate where lenders are cautious to lend, rates for personal loans have remained high despite bank rate sitting at 0.50% so this offering makes a refreshing change. There is also the extra security that Blackhorse is a well known lender and is part of the Lloyds Banking Group. 

However, don't waste an application if you have an impaired credit history - failed credit applications can have a negative impact on your credit score and further reduce your chances of being accepted for a loan in the future.

Top Tip

Before you apply for any form of credit, whether it be a loan or a credit card, check your credit score. You can obtain a copy of your credit file from the credit reference agencies Experian, Equifax or Call Credit. This will give you a better indication of which deals you are likely to be accepted for and only costs a couple of pounds.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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