A Look at Secured Loans

A secured loan is one of the most popular ways to borrowing money in the UK. The word ‘secured’ refers to a part of the loan process. Normally property, like your home, is used as a guarantee for the loan; you secure the property against the loan.

If you fail to keep your repayments, the item used as security is taken by the lender – i.e. you loose you home. Although most secured loans are done with houses are the security, you can secure your loan to any property you have, whether the lender will agree to it is another matter. The majority of lending in the UK is done on a secured basis.

At the moment, borrowing is at an all time high in the UK with mortgages making the most of the market as expected, but with a high rate of home equity loans. The difference between a mortgage and a home equity loan is that a mortgage is borrowed to buy a house, and it is also secured over the house. A home equity loan is when you already own a house, so you borrow for another purpose but still secure the loan over your house – also known as a remortgage.

So why are secured loans so popular in the UK, well it’s for a number of reason, below are some of the benefits.
Benefits of a secured loan

• The interest rate will be a lot lower.
• The terms will be less onerous as for unsecured borrowing.
• The amount borrowed can be much higher.
• It is easier to be approved for the loan.

The main risk that you have probably noted is that you risk losing your home if you fail to keep up your repayments. The lender can sell you home to regain the value of the loan. So if you are looking at a secured loan you have to consider the risk, a good secured loans company will give you plenty of information about the risks involved before you sign anything.

With most secured loans there are safeguards to stop this happening and your home can not be repossessed with out a court order. Likewise, car finance is typically secured over the vehicle you are seeking to buy. If you fail to make the monthly payments, the vehicle will be repossessed. There are also a number of long term consequences to defaulting on a loan. You could effect your credit rating and get CCJ’s.

While borrowing on a secured basis will give you access to more credit at better rates, all borrowing does ultimately depend on your credit report. The better your past behavior and credit rating, the more willing banks and other lenders will be to taking you on as a creditor. If you have a poor credit rating, you should consider borrowing a small amount and paying it off properly to improve your rating. This will put you in a better position when it comes to the really big purchases of life such as a new house.

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If you are in the market for a secured loan, for debt consolidation or remortgaging, or maybe a new car or home improvements - speak to eloans the provide secured homeowner loans

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