Secured loans
You've probably all seen the cheap loans adverts on day-time tele asking the question "Are you a homeowner?". Well, these are secured loans as the loan lender is asking you to secure your property against the loan.
What are secured loans?
Secured loans (or secured personal loans) are loans that require the borrower to provide the loan lender with some form of security. With secured loans, the borrower provides their property as security, regardless of whether they have a mortgage or own it outright.
How much can I borrow with a secured loan?
Secured loans can be from a £2,000 up to £50,000 although some loan lenders may provide a larger secured loan amount, depending on your circumstances and how much equity there is in your property.
Secured loans are usually repaid monthly over an agreed period, sometimes for as long as 25 years. Check whether the secured loan lender charges a penalty for early repayments on the secured loan.
The interest will depend on the APR (Annual Percentage Rate) or the loan and the period of repayment.
Arranging a secured loan
Secured loans are easier to obtain than unsecured loans as the secured loan lender has the protection of the property if the borrower is not able to repay.
Using property as security means that self-employed people and people with bad credit are able to arrange secured loans.
Trouble repaying secured loans
If you experience difficulties repaying a secured loan you must seek advice from your secured loan lender as soon as you can as your property acts as security for your loan and is therefore at risk if repayments are not met. Seeking help early is crucial and the more sympathetic your secured loan lender is likely to be. The Citizens Advice Bureau can also provide help and advice.
Where to find cheap secured loans
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. MISSING PAYMENTS WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE.