A simples guide

Review & compare secured loans

We all have times where we need some financial support. This might be in the form of a credit card or a loan. If a credit card doesn’t offer enough credit, and personal loan is not an option, then a secured loan might be useful.

 

Secured loans can come with certain risks as the name suggests you’ll need to secure it against something, and this is often the equity in your house.  Loan rates will vary, but if you can afford the loan’s monthly repayments then it’s worth looking into as you’ll often get a much better rate of interest with a secured loans than with an unsecured personal loan.

 

If you don’t know where to start then you’re in the right place, we can guide you through the maze and get you the best deal.

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What are secured loans?

Secured loans are also known as homeowner loans, because they are normally secured against the equity in your home. As it’s secured against an asset, you will often be able to borrow more than you could with an unsecured loan and because it’s is a lower risk for the lender, you’ll often get a better rate of interest than with an unsecured loan. As with all loans the exact rates will depend on your personal circumstances, so be sure to shop around carefully for the best secured loans for you.

With a secured loan you can generally borrow anything from £5,000 up to £125,000. So if you need funds for home improvements, or any other major expense, then this can be an effective way to raise finance.

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Why choose this type of loan?

As we’ve outlined above if you’re absolutely sure you’ll be able to keep up the repayments a secured loan could be a good option as you’re likely to get a lower rate of interest, be able to borrow more (if you need too) and receive potential longer repayment terms, allowing you to spread the cost over a few years (be aware though the longer the term of the loan, the more interest you will pay.)

A secured loan could also be an option if you need to consolidate debt from credit cards or unsecured loans with higher interest rates. Secured loan rates can be an effective way of bringing your borrowing under control.

What are the pros and cons of this type of loan?

Getting larger sums of money may not be possible any other way (without winning the lottery or completely re-mortgaging your home or even selling it). So if you need a major cash injection and there is no danger that you will fall short on the repayments then a secured loan can be a safe way to borrow the money.

Make sure you understand the risks though, as some lenders can act quickly if you miss payments as there is obviously a significant payoff involved. You’ll also need to think about whether a fixed or variable rate loan would be right for you. Fixed rate loans would give you the security of always knowing what you’ll pay each month, even if bank’s base rate rises.

However it could be more expensive than a variable rate loan. A variable rate loan could vary with the bank’s base rate (depending on the T&Cs) and maybe cheaper initially, but could turn out more expensive over the longer term or vice versa. What suits you best will depend on your personal needs.

The arrangement fees and other associated charges can also be high with a secured loan, so make sure you fully understand every charge. Look at the total amount repayable as well as the headline APR. Also, make sure you have read the fine print, understand the missed payment terms, just in case the worst happens. Lastly make sure you’ve compared your options using our secured loans comparison service and compared the different offers available, so you can find the right offer for you.

 

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