Overview of secured loans

Secured Loans FAQ

What is a secured loan?

In very simple terms a secured loan gives security to the lender on the loan other than just a simple promise to repay the loan.

This would normally be a first or second mortgage on the borrowers home.

Secured loans in the UK are mainly categorised by the fact that they are for homeowners.

This means that the person taking out the loan uses their home as collateral.

Should you fall into any difficulties or are unable to make the repayments required on your loan you will very possibly lose your home.

This is why before taking out a secured debt consolidation loan it is absolutely vital that you solve the source of your debt problems and make sure that you have budgeted fully and can cover the loan repayments

Because the lender has security, the interest rate APR offered is normally lower than for unsecured loans, but rates can vary greatly depending on individual circumstances and the lender.

In the event of the borrower defaulting on repayments, the lender may begin legal proceedings to recover the money owned. This could ultimately end up with the borrower's assets being sold.

What is the difference between an unsecured and a secured loan?

A secured loan is based on the fact that, as a homeowner, your property gives the lender security.

That means you'll usually get a better interest rate on a secured loan, compared to an unsecured loan, because the lender considers it to be less of a risk.

Are Secured Loans Easier To Be Approved ?

Due to the fact that you are in effect betting your home on the fact that you can repay any secured loan taken out, you will normally find it easier to be approved for this type of loan.

Unsecured loans are more difficult to come by as they provide more risk to the loan company.

Overview of secured loans