 A
guide to secured loans for homeowners
This type of loan is normally secured on the homeowners property
or possible other assets. Depending on the finance company's lending
policy, secured loans may be used for any purpose like home
improvement projects, such as conservatories and extensions, or debt
consolidation, the purchase of a new car or boat, paying for a
daughters wedding, or a luxury holiday such as a cruise, or even setting up a
new business venture.
The advantages of secured loans are that they may offer lower
interest rates because the perceived risk to the lending company is
less. This is because the loan is secured against an asset which
is usually the homeowners property.
Unlike a personal loan which is unsecured, the amounts of money
that can be borrowed for the secured option vary between £1,000 and up to £75,000. Unlike
some personal loans the repayment period can be spread
over a longer time period which can vary typically between five and
twenty five years, therefore reducing the monthly amount payable.
This is especially helpful to those homeowners who are seeking an
affordable loan for consolidation of their debts.
Homeowners who have suffered with a bad credit history, CCJ’s,
arrears, defaults, or bad credit ratings are more likely to have
successful applications with companies who specialise in bad credit
secured loans than unsecured applications, because the property or
asset is guaranteeing the loan and therefore this is deemed an
acceptable risk as far as the lender is concerned.
Taking out a secured loan may be a serious alternative to
re-mortgaging for homeowners as upfront arrangement fees may not apply. It is
also worth noting that this depends on the individual lenders terms
and conditions when applying.
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