Secured Loans Can Save Money October 29th, 2010
There are many ways for individuals in the UK to borrow money through a personal loan, but some ways can end up being far more expensive then other methods. When people are looking for a new loan, one of the biggest considerations is to get the best rate on a cheap loan.
For a potential borrower who owns their own home, a secured loan is often one of the cheapest and most effective ways of borrowing money, particularly if the loan is for a large sum, or to be repaid over a longer time than an unsecured loan would be.
A secured loan can be used for almost any legal purpose, from major purchases, to home improvements or debt consolidation of more expensive unsecured loans and credit cards.
To qualify for a secured loan, an applicant must be a home owner and have a sufficient amount of equity in their home over and above their home owner loan or mortgage, as the secured loan will take a legal charge over the property, as security for the loan.
Someone with a less than perfect credit history is more likely to be accepted for a secured loan than they are for an unsecured loan, or other form of borrowing, as the security offered by the property reduces the risk for the loan company in the event of the loan defaulting.
Once again, due to the security being offered on a secured loan, the overall risk on the loan is deemed to be lower and therefore the interest rates charged are usually cheaper than other types of borrowing.
Anyone who takes out a secured loan must be aware, that because they have used their home as security for the loan, this could be repossessed by the lender if they fail to keep up with the loan repayments and fall into default on the loan.