What Exactly Is A Secured Loan Uk?

By Author: John O’Farrell
Total Articles: 23
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During these testing economic times, more and more people are turning to secured loans in a bid to balance their finances. As with many of the different facets of the financial industry though, many people are confused as to what exactly a secured loan is, so this article aims to answer that question.

In the UK the basic premise of a secured loan is that it uses your house as collateral, usually as a second charge behind a mortgage. This is different to the American version where you can get secured car loans or use other assets as security. In the UK the lender requires a charge against your house should you fail to meet the agreed repayments they have recourse to this security. It’s as serious commitment then so make sure you compare secured loan terms & conditions carefully before choosing.

So we can see why Lenders like secured but what is in it for the borrower? Perhaps the main advantage though is that the rate of interest is always going to be considerably less than that of an unsecured loan. This goes back to the point about the lender feeling protected again – an unsecured loan means that a bank ...
... has got nowhere to go should the loan default, meaning that higher interest is charged to make the risk worthwhile. A secured consolidation loan can also help the borrower manage payments and make life easier.

The other major advantage with this kind of borrowing is that if there is sufficient equity in the property they are relatively easy to get. Indeed if you have a lot of equity but a poor credit record, getting a secured loan may be the only borrowing available to you but it can be used to rebuild your credit rating – an important consideration for many.

There are several providers throughout the United Kingdom so competition is healthy. While we are on the subject of the different lenders, it is important to remember that their offers will always be slightly different to each other, so always ensure that you compare secured loans. This is best done using a respected broker.

While the above two points undoubtedly make a secured loan the best choice for anyone looking for a bit of extra money, there is one very important point to make regarding them. This is that failure to make the repayments on the loan can result in your home being put at risk. This is because the home is the collateral and should repayments not be made, the lender will attempt to gain the money owed through the sale of the equity in the home.

Whatever way it is looked at though, if looking for a loan then a secured loan is a good option to consider. Whether looking for secured consolidation loans or secured non-recourse loans, there is something for everyone. We’ve even heard of someone financing their wedding this way – what do we call that – a secured wedding loan perhaps? This market just keeps growing!

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Choice Loans is in a privileged position of having access to ALL Secured Loans lenders in the market.