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What is a secured loan?
A secured loan is an affordable, long-term borrowing product that is usually only available to homeowners or those with valuable assets. Using funds secured against the equity in the borrower’s property, or some other suitable asset, loans are typically available in the region of £5,000 to £125,000.
Why choose a Secured Loan?
Unlike personal loans, which are typically only available to those with good credit histories, a secured loan enables you to borrow a much higher amount and the interest rates are normally much lower as the lender knows that the repayments are protected.
By using your home as security, you could easily be approved for a loan of £25,000 or more – provided you can afford the repayments.
Of course, it is important to remember that failure to meet the repayments on time could mean that your home is at risk – so you need to make sure that your payment plan is realistic.
Why Not Re-Mortgage Instead?
Although some borrower’s might be better off remortgaging, their homes to raise funds, some mortgages have large exit fees and therefore are a more expensive option. Secured loans tend to be a much cheaper alternative in terms of interest rates.
If you are looking to borrow £25,000 upwards and you have sufficient equity in your property then UK Property Finance are here to help!
When applying for a Secured Loan your acceptance will be influenced by the following:
You can apply for a secured loan even if your credit rating is less than perfect. However, the amount you can borrow and the interest rates you will be charged will be influenced by your credit score at some point during the decision making process. A good credit history will enable you to borrow higher amounts at lower rates – although you can still get a good deal even if you have defaulted on some repayments in the past.
Most lenders will only consider a secured loan application if the borrower has been a UK resident for three years or more. If you have lived at the same address for a considerable length of time, your chances of approval are generally much higher. However, UK Property Finance are able to help out in certain situations when a borrower is looking for a secured loan in exceptional circumstances.
Ability to meet the Repayments Required
If you are looking to take out a loan that is secured on your home then you need to make sure you can realistically afford to make the repayments on time every month. Although the borrowing rates might be low, failure to make the required payments on time might result in the loss of your property.
Is a Secured Loan the best option?
Provided you can make the repayments on time and you borrow sensibly, a secured loan can be an exceptionally useful source of finance. Secured loans can be used for many reasons including home improvements and debt consolidation. The loan itself can be taken out over a period of 1 to 25 years and the interest rates are typically in the region of 5 to 6% per year. Depending on your credit rating and other personal circumstances, your chances of being approved are generally quite high.
Is a secured loan a mortgage?
Although a secured loan is not quite the same thing as an outright mortgage, they are typically only made available to homeowners and they are sometimes referred to as second mortgages by some providers. They also allow borrowers easier access to long-term funds provided the applicant has sufficient equity in their property.
What is a home owner loan?
Homeowner loans are long-term, secured loan product that use the equity in a borrower’s home as a means of securing the debt. Although loans for home owners are often referred to as secured loans, they are slightly different, if only in technical terms, as other valued assets cannot be used as collateral.
Can you get a second mortgage?
If you are looking to get a second mortgage you will need to own a property, although this can be a property you rent out or let someone else live in. Second charge mortgages are secured against the equity in a home that you own, although you will also need to show you can afford the repayments when applying.
What is an unprotected loan?
An unsecured, or unprotected loan, is a short-term financial product that does not require some type of asset as security should the borrower default. Affordable unsecured loans are usually only made available to those with high credit scores and the repayment periods are typically much shorter than with secured loan types.
What is the difference between a secured and unsecured loan?
The essential difference between a secured and unsecured loan is that a borrower needs to offer the lender a valuable asset when applying for a secured product. Secured loans are also more appropriate for those looking to borrow higher amounts over a longer repayment period.
What is the difference between a secured and unsecured personal loan?
Secured loans are different from unsecured personal loan products in that the lender will expect some sort of asset as collateral with a secured loan as protection against non-payment. This also means that those opting for unsecured loan products, such as credit cards and personal loans, are not at risk of losing their homes should they default on the finance.
To find out more about secured homeowner loans, second charge mortgages and other secured finance products, call UK Property Finance today.