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What Is a Secured Loan Broker?

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 8, 2023

What is a secured loan broker & how to find one?

When applying for a secured loan, unsecured loan or any other line of credit, there are two ways you can go about it.

On the one hand, you could go in guns blazing and approach a secured lender directly. This means doing all the legwork yourself to ensure you’re getting the best deal. You’ll need to compare the various interest rates on the loans, the associated application, completion, valuation costs, the maximum loan term, the early repayment charge, and everything else that goes into secure lending.

On the other hand, you could go through a trusted credit broker that understands the ins and outs of the UK lending market and let them do all the heavy lifting for you.

What is a secured loan broker, and how do you find one? This guide explores the answers to these questions and more. Read on.

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What is a secured loan broker?

A secured loan broker or mortgage broker is an individual or company that acts as the intermediary between prospective borrowers and lenders. They will act on your behalf to assess your borrowing needs based on your present financial situation to ensure they help you secure a loan that’s right for you.

If a secured loan is what you seek, they will search the market to find a lender offering the most competitive interest rate and repayment terms and one that will likely approve your application.

Here’s what a broker can do for you when looking for secured loans:

  • Provide you with tailored advice based on your financial position and credit score
  • Match you with suitable lenders based on their acceptance criteria
  • Compare secured loan products across the whole market to get you the best deal
  • Evaluate your suitability for various credit products
  • Direct your loan application to the secured loan lender that’s likely to approve your application based on your present circumstances
  • Give you access to intermediary/broker-only deals for secured loans with their panel of lenders

A secured loan broker or mortgage broker acts on your behalf. They have your best interest in mind to help you secure the funding you need. Specialist brokers are known to work exclusively with bad credit borrowers to connect them with niche lenders whose speciality lies in high-risk lending. If you have a poor credit history, going through a secured loan broker would be your best bet to secure the cash you need.

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Should I use a secured loan broker or go directly to the lender?

If you’re looking to get a secured loan, it would be easier to go through a broker. Nothing beats outsourcing your research to a qualified professional who does this all day, every day. There’s no amount of research you could possibly do that comes close to the years of knowledge and expertise these professionals have amassed on the UK lending market.

They know precisely which lenders offer the lowest interest rates and which ones have the longest repayment terms. They know the ones that give precedence to credit scores and those more interested in your ability to afford the monthly repayments regardless of your adverse credit history. They know where to route your application based on the lender’s likelihood of approval.

Any research you do on your own is a drop in the ocean compared to the insider knowledge experienced secured loan brokers have on the lending market.

It is important to keep in mind that a loan broker is just that – a loan broker. If you have bad credit, there’s no guarantee that your application will be approved because you went through a secured loan broker or mortgage broker. It will certainly improve your chances, but you could still get rejected if the lender considers your credit score too low.

If they do approve you for a loan despite your critically low credit rating, you should expect to pay higher-than-average interest rates. Either way, a higher annual interest rate is better than not getting the cash you need entirely, which is what would likely happen if you tried to apply for a loan with a lender directly.

How much does it cost to get a secured loan broker?

Secured loan brokers or mortgage brokers act on behalf of prospective borrowers. They provide commercial services and, therefore, need to make a profit to keep their operations running. They do this by charging a broker fee. The model they use to acquire these fees may vary from broker to broker.

Some brokers charge prospective borrowers a small fee to search for the best secured loan, offering the best terms and interest rate options. Others charge a broker fee only when prospective borrowers take out the loan. Others don’t charge borrowers a broker fee. Instead, they collect a small commission from the lender, derived from the borrower’s monthly loan repayments, which, in turn, increases the overall cost of the loan.

It is worth noting that a secured loan or mortgage broker that takes a commission from the loan provider isn’t acting in your best interests. Rather than search the entire market to find the best loan deal, they’ll direct you to the lenders they’re partnered with. Keep that in mind when looking for the best secured loan broker or mortgage expert.

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How fast will my application be approved if I go through a secured loan broker?

Right off the bat, it’s important to note the approval times for secured loans are generally longer than those for unsecured loans. In the latter, all that the lender has to go on when assessing the loan eligibility of a borrower is their credit score. If you have good credit, it should take no more than a few days to get your application approved.

On the other hand, secured loans involve a lot more due diligence. There’s a lot of paperwork involved, all of which has to be verified and validated. For one thing, the asset you’re putting up as collateral must be appraised. Your income source and amount need to be confirmed.

If you have any other existing borrowing, such as an existing mortgage, credit card bills, or other forms of debt, you need to provide debt statements from the respective creditors so that the lender knows the total loan amount you owe on them and use this information to carry out an affordability assessment.

In short, a lot more goes into secured loan approval. It can take anywhere between two and eight weeks to conclude the process. The waiting times will be on the shorter end of the spectrum if you go through a broker.

Top-tier firms have sophisticated tracking technology to monitor your application in real time. They can also put a healthy amount of pressure on the lender to move the approval process along. It is not unusual for brokers to make dozens of phone calls a day to lenders inquiring about the status of a single application if it doesn’t appear to be making headway.

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How to find a secured loan broker

So far, you know what a loan broker or mortgage broker can do for you and why you need one, especially if your credit history is less than ideal. The next logical question you might ask is: How do you find a secured loan broker or mortgage broker? Below are a couple of pointers you can use to help point you in the right direction:

Do research

Anytime you have an important financial decision to make, you need to do your due diligence. Go online and search for the best secured loan broker UK and see what companies show up in the results. Then search for online reviews about them to see what past clients had to say about their services.

You could also reach out to colleagues, friends, and family if you know anyone who’s recently taken out a mortgage or loan. Ask them if they went through a broker and whether they were satisfied with their services.

Compare different loan or mortgage brokers

Once you have a modest list of potential loan brokers you can work with, prepare a list of criteria you can use to vet them. Then, get in touch with them and ask them questions like:

  • loan broker with coupleHow long have they been in operation?
  • How many loans have they gotten approved in the past year?
  • Do they charge a broker fee or lender fee, and if so, how much?
  • Does their network of lenders include specialist bad credit providers?
  • Do they have a set of lenders they prefer to work with?
  • What credit products do they specialise in?

Based on the answers they provide, you can determine which broker is right for your present financial needs. The more experience a broker has, the better for you and your application. Look for one well versed in debt consolidation, bridging finance, bad credit mortgages, homeowner loans, second charge mortgage products, etc.

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Get expert help from trusted finance brokers

Applying for a secured loan can be a daunting process. If you don’t do it the right way, it could result in a denial, which will inevitably show up in your credit file and impact your chances of getting approved for credit in the future. The best thing to do would be to get help from a trusted loan broker.

They’ll act on your behalf and match you with a lender offering the most competitive interest rate and repayment terms. They also know which lenders will likely approve your loan application on the first try, even with bad credit. They’ll let you know what supporting documentation to provide, go over your current financial situation, and give you useful information to improve your chances of approval.

We use an accredited money advice service with a solid track record of getting more homeowner loan products, bridging loan products, personal loan products, and lifetime mortgage applications approved than any other broker in the UK. Get in touch with us today for loan or mortgage advice, and we will get you a free quote within minutes.

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FAQ

Can I get a secured loan with poor credit?

Yes, you can. You just need to know which lender to approach. Bad credit loan providers are few and far between. These specialist lenders are often hard to come by, especially if you’re searching for them yourself. Be wary of online scammers purporting to be bad credit lenders.

To access legitimate specialist lenders and avoid falling victim to cybercriminals, always go through a trusted loan broker when looking to get a secured loan.

Should I go through a broker when applying for a secured loan?

You don’t have to, but it would be in your best interest. Experienced loan brokers are well-versed in the UK lending market. They have access to a wide network of lenders to get you the best possible loan deal based on your specific financial needs and credit history. They will only match you to lenders that will likely approve your application on the first try.

Are online loan lenders legitimate?

Some are, and others are not. Always do your due diligence before transacting with any purported online lender. The first thing you should do is check whether they are licensed and regulated by the Financial Conduct Authority (FCA). If the provider is legitimate, its name should appear in the FCA’s Financial Services Register.

Check to ensure the contact details in the register match those displayed on the lender’s website. If you have any complaints about a particular lender, you can report them to the Financial Ombudsman Service.

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