Secured Loans

A 'secured' loan is a loan where assets belonging to the borrower provide added security for the benefit of the lender - the loan is said to be 'secured' on the asset that you offer as security. In most cases, the security offered by the borrower is their own home, but it could be another property that they own. If the borrower fails to make the necessary repayments, these secured assets may be taken away by the lender and sold in order to repay the debt.

If you own your home (with or without a mortgage), then this is likely to be your main asset and lenders will therefore want to use your home as their security for any loan. This kind of borrowing may be called either a 'secured' loan or 'home-owner loan' and in most cases is really another type of mortgage. The lender will want to make sure that there is sufficient value in the property to provide adequate security for the loan - if you bought your home some time ago, then it may have increased in value since it was purchased, so there could be additional value or 'equity' that can be utilised.

Assuming that you already have a mortgage on your home, then an additional loan that is secured on the same property is known as a 'second mortgage' (the existing mortgage is your 'first mortgage'). Generally the money you borrow as a second mortgage can be used for any purpose, but the loan still needs to be repaid in accordance with the terms of the loan agreement, just like your first mortgage.

Secured loans are often provided by finance companies, who compete with banks and building societies for this kind of business. Because the first mortgage lender usually holds the deeds for the property and has priority in reclaiming any unpaid debt, the secured loan carries a relatively higher risk and lenders will often charge higher rates of interest. However, the interest rates charged on secured loans are usually much lower than for unsecured loans. If you shop around, you may find that some charge more than others, but you still need to look carefully at the terms and bear in mind that this is a serious legal commitment, so it is often advisable to get expert advice from a specialist before signing.

Contact us now on 01670 840840 for confidential advice on applying for a secured loan today. You've got nothing to lose.