Secured Loans For Homeowners

UK loan products fall into two categories: unsecured loans and secured loans. Secured loans are secured on your property which provides security for the lender and some benefits for the borrower. In order to qualify for a secured loan you must have a property or some other asset, even if it’s already mortgaged. As long as you have some equity in it, or if it is valuable you will qualify for a secured loan.

Most of us are more familiar with unsecured personal loans. Every time we get some kind of credit, such as a bank loan to buy a car or we take out a hire purchase agreement, we are basically taking out an unsecured loan. That means there’s no security for the loan – and no guarantee that the lender will be repaid. Interest rates for unsecured loans are often high, and the amounts that you can borrow are relatively small. Loan periods are typically ten years or less.

Secured Loan Advantages

So, what are the advantages of getting secured loans for borrowers? First of all, unlike unsecured loans, which have a ceiling of £25,000, unsecured loans can be for much higher amounts. You can usually borrow large amounts for long periods. It’s not unusual for someone to borrow £50,000 or £100,000 over 20 years, provided they meet the lender’s criteria.

Since the loan is secured on your home, the interest rate compares well with the rates on unsecured loans. You can expect a difference of anywhere from one to several percentage points, depending on the lender and the particular deal.

Many people apply for secured loans as a way to get out of debt. That’s because So if you have mortgage arrears and unpaid credit card bills, you can lump the whole debt into one loan and have only one payment to make. Debt consolidation loans are specialist products. That means that you will probably get a wider range from a lender who specialises in this type of loan product rather than from your high street bank. However, other types of secured loans are also available on the high street.

A secured loan is not just for debt consolidation. It is also a great way to release the equity from your home. Once you have the cash in hand, you can use it for anything you like. Many people take this option in order to renovate or extend their homes.

While a secured loan can be a great way to solve your financial problems, remember that it is secured on your home, so it is essential to keep up to date with the payments.