First flexible secured loan launched in UK
A new kind of secured loan was started by offering borrowers the option of withdrawing funds as and when they need it rather than having to take a full lump sum. This new loan, the “FlexiLoan”, is the first of its kind in the United Kingdom and is the creation of Selina Finance, a fintech lender.
The FlexiLoan allows borrowers to access funds secured against their home up to a pre-approved credit limit. Once approved, they can take what they need when they need it and are only charged interest on funds taken. This is a significant difference from other types of secured loans which only offer borrowers one lump sum. The ability to withdraw funds as needed rather than taking a lump sum could save some borrowers money as they will only receive interest when the money is taken.
Borrowers must make the minimum repayments every month and can even repay the loan in full without undergoing prepayment changes. The minimum monthly repayment is based on overdue funds over the remaining term. This may increase or decrease as funds are withdrawn or returned.
Borrowers can choose loan terms of up to 30 years, with the first five of them offering the flexible loan features. After five years, any borrowed money that is not repaid reverts to a traditional secured loan with a fixed monthly repayment. The borrower can choose to pay this until the end of the term or to repay the loan in full.
The FlexiLoan is available up to 75% LTV, with a minimum loan of £ 25,000 to £ 125,000 and a minimum term of three years to 30 years. The loan can be used for a number of reasons, including home renovations where the borrower needs to access funds gradually as the renovation progresses or to pay for private tuition fees and repay them at each term.