A guide to applying for a secured loan

Unlike personal loans a secured option is available to homeowners who own a property or other fixed asset. This type of loan is generally easier to obtain from lenders who specialise in this area because there is security for the lender in the scenario that the homeowner defaults on paying the repayments at a later date.

There are of course advantages of taking out a secured loan compared to the unsecured option such as a lower interest rate and longer repayment periods. However, it must be stressed that every loan application is assessed on it own merits according to the lenders borrowing policies.

The main disadvantage of secured loans is that this type of borrowing is secured against your home or other fixed asset. Therefore, if you are unable to keep up the monthly repayments your home maybe at risk. Some lenders also impose penalty charges if you repay the debt early, which in some cases can be expensive.

What if I am already paying a mortgage on the property and wish to take out a secured loan?

This is still possible subject to the lender borrowing policies provided there is sufficient equity in your home. Lenders sometimes place applicants into two categories, those who require a secured loan against a mortgaged property and homeowners who own the property outright with no mortgage or loan of any description.