Secured Loans

Being the owner of your own home puts you in a very good position when it comes to borrowing money in the form of a loan. But do not be fooled by the term ‘own’, this simply means that you have a mortgage and are thus buying the home and have money invested in the property. The property acts as collateral against which the lender can balance risk against, and thus you get a better rate. But your property is at risk. On the other hand; secured loans do have a number of definite benefits over a lot of the other types of borrowing. Lower risk to them, means that banks and building societies can pass-on some of their savings (made on insurance etc) to you, by offering much better loan interest rates to property owners. However, desirable Annual Percentage Rates aren't all secured loans have got to offer.

Benefits of a secured loan

In today’s market secured loans come with a whole bunch of flexible repayment terms, so its' important to be astute when reading the small print of a loan. Terms to be sure to look out for include: ‘payment holidays' whereby you are able to halt loan repayments for an agreed period of time in order to invest capital somewhere else (say to help with the costs of a wedding or newborn child) and encouraging redemption charges - so it won’t go against you if you want to pay the loan back early.

Secured loans are characteristically spread over a far greater timeframe than unsecured loans, which means that the lenders are far less likely to come down on you forcefully if you default on the odd loan repayment. However, if you are at’ all unsure as to weather or not you can pay back the loan you should not be taking it on. Repayment terms on a loan of up to 30 years also mean that it's easier to balance your finances, so that you shouldn't come across any nasty surprises.

A few things to consider

With your property as security on a loan you'll find that lenders are prepared to offer you a much larger sum. Unsecured borrows (with a good credit history) can expect a maximum loan of £25,000. On the other hand; loans offered to secured loan borrowers are calculated according to the value of their property, which can involve some complicated calculations.

Before embarking on the taking out of a secured loan it is worth getting council from an independent financial advisor to obtain an overview of other borrowing options. It may turn out that it makes shrewder financial sense to consider re-mortgaging your property, or opting to take a home equity loan.

People often misguidedly think that bad credit means that they won't be able to get a loan. However, homeowners with bad credit histories (as a result of having a County Court Judgement made against them or defaulting on credit card repayments) shouldn't run into any difficulties when applying for a secured loan. For a more extensive variety of loan types visit Loans UK.