A new type of secured loan has been launched offering borrowers the option to drawdown funds as and when they need them rather than having to take a full lump sum. This new loan, the ‘FlexiLoan’ is the first of its type in the UK 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 to other types of secured loans that only offer borrowers a single lump sum. The ability to drawdown funds as needed rather than taking a lump sum could save some borrowers money as they will only be charged interest on when the money is taken.
Borrowers must make the minimum repayments every month and can even pay back the loan in full without incurring early repayment changes. The minimum monthly repayment is based on the funds outstanding over the remaining term. This can increase or decrease as funds are drawn down or repaid.
Borrowers can choose loan terms of up to 30 years, with the first five of these offering the flexible loan features. After five years any money borrowed that is not paid back reverts to a traditional secured loan with a fixed monthly repayment. The borrower can choose to pay this until the term ends or pay off the loan in full.
The FlexiLoan is available up to 75% LTV, with a minimum loan of £25,000 up to £1,000,000 and a minimum term of three years up to 30 years. The loan can be used for several reasons including home renovations where the borrower needs to access funds gradually as the renovation progresses or to pay for private school fees and repaying these across each term.