What is a secured loan?
A secured loan is a loan that is secured on your home or property. It is any loan that requires you to provide the lender with some form of security than just a promise of payment. Security will be on your property or home. The property can be mortgaged or wholly owned.
If you accept a loan secured by your home, you must remember that while the property remains in his possession, can be assumed by the lender if the loan and interest are not paid as agreed. The lender will sell the property to recover the loan plus additional costs incurred to retrieve the money.
Guaranteed Loan Benefits
In many cases, secured loans can be amortized over a longer period with a lower monthly repayment. The interest rate will be lower on a secured loan than an unsecured loan comparable. A secured loan may also offer more flexible repayment terms.
1. If you are a homeowner, you can get a lower rate through a loan secured by your property as collateral. By taking a secured loan, you agree to allow forced sales (embargo or recovery) of assets to repay the loan. The risk to the lender is reduced so the interest rate offered is lower. This is why secured loans are usually cheaper than unsecured loans and other forms of debt. The lender has the added benefit of security, which provides protection in case of inability to pay.
2. Secured loans are more accessible to those with poor credit histories. This means that people who are self-employed or have recently changed jobs or who have adverse credit (CCJS arrears, by default, etc) can get a secured loan.
3. You can borrow larger amounts and repayment over a longer period. The amount available usually ranges from £ 3,000 to £ 50,000, although some lenders consider lending more. Compare this with unsecured loans, which are only allowed to borrow up to £ 25,000. If you want to borrow a larger amount or if you need a longer period in which to repay the loan, secured loans may be the most appropriate for you.
4. You can consolidate more expensive loans into one payment, much less a month. You can choose to subscribe to a secured loan to consolidate debts and replace the high-interest loans on a loan at low rates. The loans being consolidated may include higher purchase loans, loans and unsecured credit cards.
Useful points to remember
Before entering a secured loan, make sure you can afford the monthly payments. Also, read the loan agreement and pay particular attention to the interest rate imposed, the duration of loan repayment and the total amount required to pay. If you can not repay the loan, the lender can take possession of your property or home and sell it to repay the loan. If you borrow money through a mortgage as collateral, you agree that the lender can claim the mortgaged property, if you can not stay within the agreement. Your home is at risk if you do not keep up payments on a mortgage or a further guarantee to the subject. You can read some articles on secured loans: http://www.commercial-mortgage-guide.org.uk/loanguide/