Secured Loans
A Secured Loan is a loan taken out that will require the borrower to provide the lender with some form of security usually this will be the borrowers’ property. A loan which is secured against property that is already mortgaged will be referred to as a second charge however loans which are taken out against a property owned outright by the lender with no existing mortgage will be known as a first charge.
Paying back a secured loan
Before the borrower opts for a secured loan there are a number of factors to consider, secured loans can be used for any purpose including debt consolidation but is it really the best option?
Secured loans are usually available from between £3,000 and £50,000. However, a few lenders will approve secured loans of up to £100,000. This is dependent upon the individual circumstances of the applicant, most importantly their credit history and current financial status.
A secured loan is paid back on a monthly basis over a period of time agreed by the borrower and the lender. The term period, is dependent upon the amount borrowed and the lender, although most terms range between three years (36 months) and twenty five years (300 months). For those wishing to borrow large sums of money, a secured loan may be the best option.
Applying for a secured loan provides the lender with added security that the terms of the agreement will be met. This can be of great benefit if the potential borrower has a bad credit rating, is self employed or if the borrower has recently changed jobs.
Secured loans are easier to acquire compared to unsecured loans mainly because the lender has security that the loan repayments will be met. If terms of the loan are broken, the lender can take repossession of the borrowers’ property that was taken out against the initial loan. On this notion, we stipulate that a borrower should take time to consider whether they can afford the loan repayments. If the borrower defaults a repayment, their personal property may be at risk.