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The Secured Loans Market-Loan World ____________________________________ By Jonathan Jude -


With the rise in recent years of Secured Loans or Second Charge mortgages the market has grown both in the volume of loans processed and the number of organisations involved. This article will attempt to break down the market into its individu al components and explain, in general, the organisations that make up the Secured Loans Market.

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The article is aimed at people involved in the finance sector but will probably prove interesting to those taking out a Secur ed Loans or to anyone with a general interest in how the wheels of the UK finance industry work.

Secured Loan Lenders

Despite there seeming to be masses of organisations in the media willing to lend money for a Secured Loan or Second charge mortgage there are very few players who actually lend the money. This is because a Secured Loan is considered middle to high risk so there are very few organisations actually willing to underwrite the risk. Although there are only a handful of banks actually putting up the money, you will find that they may also use further downstream organisations to underwrite their own risk. For example, The London Mortgage Company, which now trades under the name London Personal Loans, says it uses up to thirty specialists to underwrite the loans it takes on.

In recent years with a fairly stable housing market and strong confidence that there will be no sudden drop in prices there are a few more organisations willing to make the leap into secured loan lending, but the number still remains quite small. It is interesting that in most cases the 'banks' that take on the second charge debt are not well known organisations. This is because most of them are not customer facing, but sit behind a myriad of intermediaries, but it is similarly interesting that some well know high street banks also take on the debt, but for various reasons outlined later in this document, they sit behind various brand names or tiered organisations so that, in the end the Customer hasn't got a clue who they are actually dealing with.

So if there are so few players actually lending the money, then why are we presented with masses of organisations offering Secured Loans? The reasons for this are multi-fold. To give some examples it is down to branding and marketing, due to core competencies (i.e. whether Secured Loans are part of a core business or incidental) and it is also in part due to the different types of media (e.g. television, internet, newspaper and radio) Secured Loans are sold. We will outline these reasons and some others later in the document.

Secured Loan Market Infrastructure

In the main, the infrastructure of the secured loans market is quite confusing. In a simple world it would be made up of banks lending the money directly to the Customer, but in the secured loan world there are several other levels of organisations we need to discuss. Firstly, there are the Brokers - these are organisations that supposedly approach various lenders to get the potential borrower the best deal.

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