Loan online uk unsecured

The loan arranger

Finance home improvements with a personal loan.

Lorna Bourke tracks down the best deals IT TAKES only a couple of days' sunshine and a bit of blossom for the Black Decker brigade to emerge, as UK handyman embarks on the annual ritual of DIY, ranging from fixing a wonky shelf to a full-scale refurbishment of the kitchen or bathroom.

This year it has never been so easy, or so cheap, to arrange the finance for a home renovation. It doesn't matter if, for convenience sake, you buy all the paint and paper, kitchen appliances and the new bathroom suite on a credit card, the important thing is then to refinance this credit card borrowing with a cheap personal loan.

"Since this time last year, the Bank of England base rate has risen by 0.75 per cent, but strong competition means that borrowers can still find personal loan deals as good as those that were on offer 12 months ago," says Daniel Newbolt, head of personal finance at Moneyfacts, which monitors financial products.

In March last year, Lombard Direct was top of the pops for personal loans, offering two- to fiveyearborrowing at a fixed rate of 5.9 per cent, with Liverpool Victoria, Cahoot, Goldfish and Nationwide not far behind, all offering fixed-rate loans at 6.7 per cent or less.

Today, Northern Rock heads the best-buy tables, offering loans of one to 10 years at 5.7 per cent.

This is less than many of us are paying for our mortgages and, because it is unsecured lending, if you do get into difficulties with the repayments, the lender cannot foreclose on your home.

For loans at less than 7 per cent, there is plenty of choice out there.

The best thing about these loans is that they are all offered at fixed rates, so the repayments remain the same throughout - even if the Bank of England puts up interest rates. "We've seen competition hotting up during the last few weeks, and, although base rate is predicted to increase further this year, while providers continue to fight for market share, it is unlikely we'll see any big rises in personal loan rates," says Newbolt.

However, it might be wise not to delay. While most experts believe that any increase in interest rates will be postponed until after the expected May general election, there is no guarantee of this. If rates go up by another 0.25 per cent, it may be difficult for lenders to maintain their rates at these low levels.

If you are a good credit risk and have no black marks on your credit file, you should have no difficulty signing up for a personal loan online or by phone. It is amazingly simple. In most cases you will get an offer more or less immediately and, generally, the money will arrive as a cheque in the post within 10 days of your application.

With personal loan rates as low as 5.7 per cent, it may not be worthwhile approaching your mortgage lender for a further advance on your home loan, but it is worth checking.

If you are on a discounted mortgage at, say, 4.75 per cent, some lenders will let you take out a further advance at the same discounted rate.

Homebuyers with loans of less than 75 per cent of the value of their property may not even have to pay a valuation fee, and it can be possible to remortgage for enough to renovate the kitchen and bathroom for a flat administration fee of Pounds 100 to Pounds 150.

If you opt for a personal loan, you will have to decide whether you want insurance payment protection or not. It is generally much cheaper to buy this cover from an independent broker. Try Burgesses, which specialises in this field.

Income protection, which is better than payment protection, pays out a fixed monthly sum of money to cover household outgoings, such as loan or mortgage repayments, gas, electricity and telephone bills if you are unable to work because of sickness or unemployment.

Payment protection, on the other hand, provides cover specifically for a personal loan, or mortgage repayments, and is paid direct to your lender.

Cover lasts for one or two years. Homebuyers who don't have any cover for their mortgage repayments should definitely get some income protection as Social Security help with mor tg age interest payments does not start until you have been out of work for a full 39 weeks.

Income protection costs about Pounds 3 a month for each Pounds 100 a month of payment cover. You can buy the sickness cover or unemployment protection separately.

For example, there is no point paying for sickness cover if your employer pays your wages in full for the first six months you are ill, but you might want the unemployment protection.

PAYMENT protection insurance sold by the loan companies is usually poor value. For example, with a 5.9 per cent Churchill loan you would pay Pounds 151.42 a month for Pounds 5,000 borrowed over three years. If you take the company's payment protection, your monthly payments jump to Pounds 165.42. This means you would pay a hefty Pounds 14 a month for cover, which would cost you only Pounds 4.75 from a good broker.

For further information, contact Burgesses (0870 242 0015; www.protectiononline.co.uk).