Loan Packaging Company Introduces Baby Loans
A new term has just been introduced to the loan industry. Link loans, a secured loan packaging company, have just introduced “baby loans” and if you’re wondering, this has absolutely nothing to do with starting a family!
The new product is aimed at those borrowers who may have an unsecured loan, or borrowing through a credit card, for example and is designed as a cheap loan option for those people who would like to save some money on their monthly loan repayments.
Baby loans are secured loans and therefore only available to home owners. Usually, secured loans are designed for larger amounts of borrowing, normally from £10,000 upwards, but the new baby loans are available between £3,000 and £10,000.
As this is a secured loan, the risk is lower for the lender and therefore they are able to charge a lower rate of interest than many typical unsecured personal loans or credit cards. With an interest rate of 13.9 per cent and terms from 3 to 20 years, a baby loan could save a borrower a lot of money on their monthly loan and card repayments, particularly on smaller loan amounts which generally charge a higher interest rate.
Research from Link loans has found that the typical household has unsecured loan debts of around £2,700 and the new product is specifically designed to reduce the monthly cost of these smaller personal debts for borrowers.
Baby loans are available up to a maximum loan to value of 60 per cent and even though they carry an arrangement fee, they could still work out significantly cheaper than existing debts for many borrowers with unsecured loans and cards with balances of less than £10,000.
As the new loans are form a packaging company, they are only available through financial advisers and loan brokers and it is worth taking advice from such a professional before considering this type of option.
