If you have never had a secured loan then you may be wondering what they are all about. Here we’ll explain what a secured loan is and how they differ from other types of loans on offer.
A secured second charge loan
A secured loan is a loan that is secured against your property in the same way a mortgage is. It is a second charge loan. Therefore you need to be a homeowner and have some equity within your home to be able to secure the loan against. Most lenders require the borrower to be 21 years of age or older.
Larger loans than unsecured loans
Secured loans are generally larger loans from £5,000 all the way upto £500,000 and beyond. The size of the loan you can obtain really depends of how much equity you have within your home and how much you can afford to pay back. Some lenders also have limits on how much they are willing to lend, and each loan application is treated differently and is based upon personal criteria and credit rating.
Secured loans are also generally long term loans that are paid back over 5 – 25 years. Some lenders allow loans to be repaid longer than this.
Other useful articles and secured loans
What a secured loans used for?
Secured loans are popular for debt consolidation which means replacing your existing debts with a more affordable secured loan. Secured loans are popular for making home improvements such as new kitchen, bathrooms and home extensions.
Second loans can be taken out against buy to let property and are popular for landlords who wish to raise money against their investments without the need to remortgage.
If you have a bad credit history then you may find it easier to obtain a secured loan rather than an unsecured loan. This is because you have your home to offer as security against the loan and the lender will be more willing to lend to you. You may also be able to obtain more attractive and affordable rates of interest with a secured loan.
Secured loans are also used for those who need to borrow larger amounts of money and who wish to pay the loan back over the long term.
Using your home as security
It’s important to consider that like a mortgage, if you were to fail to maintain your loan repayments or pay back what you owe on the loan then you may be at risk of losing your home to repossession. In the event that you could not repay your loan then your home would be sold by the lender in order to pay back what you owe plus interest.
If you have any questions or require further information then please call us or complete our quote form and our brokers will be able to answer any further questions you may have.