Let me ask you a simple question. What would you do if you suddenly ran out of money? I'm not talking about running out of the relatively small change involved in buying the groceries this week, or filling the car up with petrol. Rather, I'm thinking about those times when you suddenly need to find a lot of money.
For example, when your daughter comes in one evening, excited and radiantly happy, announcing that she's engaged and they've set a date for the wedding - in three months. How are you possibly going to find the money you'll need to give her the wonderful reception she needs in just three months? Normal living expenses are one thing. You can handle them no trouble. But this is different.
Unexpected costs are common
Or what about the time when you and your wife realize that the kids’ bedroom is now too small for them and the cheapest thing to do is expand by building onto the back of the house? That is not cheap. Neither are some operations. So how would y you feel if your family was suddenly faced with an elderly parent in dire need of an operation to relieve their pain - but the National Health can only give this procedure to her in 12 months time? No way! You are definitely going to reach for your resources and try to find the funds for a private operation .
All of these situations are common and we no doubt have friends and colleagues who have been hit by them. So, back to the question, how would you find the money? Or, just to be realistic, how would you find it in the economic conditions that prevail in the UK at this time?
Economic conditions in the UK
Some of the economic indicators are not so good. Housing confidence is down to low levels not seen since the late 1970s, for instance. Did you see the recent report on housing confidence in Great Britain from the prestigious Royal Institution of Chartered Surveyors. In it the researchers said we have to go back 30 years to find ordinary people more pessimistic about their homes than they are now.
This is a reliable finding. Both because the institution has a reputation for accurate surveys. But also because similar findings have come out at about the same time from different polling groups. This country's biggest mortgage lender, for example, HBOS, recently said it expected a 5 percent drop in UK house prices over the next year. The Halifax organization recently said the house price index is down 2.5%. Which is a 1 percent drop in property values in the latest quarter, here in Great Britain. Capital Economic is forecasting house prices to drop 8 percent by the end of this year.
Gloomy, but there is a silver lining on this cloud. Its this - lenders are always in need of borrowers. The banks and reliable, non-bank lenders you can find on every high street, need secure places to invest their money. And what better than a depositor who has equity in his home and needs a loan to cover him for one of those unexpected situations we looked at earlier?
How to find a loan on favourable terms
If you have a share of the value of your home you can go in to any bank and start negotiating, because a loan to you would be a secure loan: a loan that can be repaid if you default, by simply selling the home and splitting the proceeds with you. Of course this is not likely to happen to anyone with a regular income who can discipline their spending. But we're talking about a secured loan taken out using the family home as collateral, for which a mortgagee sale is a possibility if repayments fall horribly behind.
Don't worry about arrears. You are unlikely to have any. But do keep an eye out on the fine print of the contract when you sign for a secured loan. Best to use a broker right from the beginning, so you can know what is happening, where the best deals are.
Bill Stone writes for Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.