What is a Secured Loan?
A secured loan, also known as a homeowner loan or a second charge mortgage, enables you to borrow a sum of money usually from £30,000 to £250,000. This loan type uses your home as collateral/security against the repayments. They’re only available to those people who own their own home and have a mortgage.
Most unsecured loans only go up to £30,000 so this is often the starting point for secured loans. If you’ve been rejected a personal loan (unsecured loan), then a homeowner loan may be the option for you as they are easier to approve because your home acts as security.
If you have a good credit history, this type of loan will be very comparable if not cheaper than other loan types. However, even if you have a bad credit history, then a secured loan could be a better option. Due to the house acting as security, we are more likely to get you accepted, although interest rates will invariably be slightly higher.
Reason to choose a Secured Loan
Keep your existing mortgage rate and avoid paying early repayment fees
If you have a low mortgage rate and it may not be possible to remortgage to the same or lower rate, then keep hold of it and look at the option of a secured loan to provide you with the extra money you need. Also, many lenders charge hefty early repayment fees, but these are again avoidable with a secured loan. Our professional advisers can inform you of whether it is beneficial to take out a secured loan and not raise money through a remortgage.
Loans for any purpose
Secured loans can be used for most purposes. Due to the larger loan amounts and longer repayment terms available popular loan purposes can be home improvement, home extensions and debt consolidation. There are many other reasons allowed, so please speak to our professional advisers today.
Lower interest rates & Repayment periods
Secured loan interest rates are usually comparably lower than for unsecured loans because they’re borrowed over a longer term. Headline interest rates on top secured loans start between 5 and 6%.
Secured loans are typically repaid over 5-25 years. This will allow smaller repayments over a longer period, but you must consider the longer the interest period, the more interest you will repay in total.
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