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What is a Homeowner Secured Loan?

A secured loan can give people the opportunity to borrow a large amount of money over a period of time. However, in order to guarantee that their money will be repaid to them the lender will secure the loan against the borrowers home.

This security allows larger sums of money to be borrowed, than with an unsecured loan. You are unlikely to get an unsecured loan for more than £25,000, but with a secured loan you could borrow up to around £500,000. Secured loans usually offer much longer payment terms allowing customers to make repayments over a period of between three and twenty-five years.

What does a Secured Loan have to offer?

A secured loan will usually offer a lower annual percentage rate (APR) over a longer period of time. If you have a number of debts to consolidate, then this could be a way of lowering your monthly repayments and freeing up your finances but don't forget that you may remain in debt for longer.
Before taking a secured loan, look at the total amount that will be repayable - longer schedules may comes with a lower APR and lower monthly payments but it could end up costing you more in the long run.

Secured loans are not to be taken lightly - you must remember that failure to keep up with your payments will have a very negative impact. You may receive visits from bailiffs, and your credit rating will be affected, meaning that it will be very difficult for you to borrow money in the future but the worst case scenario is that the lender is entitled to sell your property in order to reclaim any outstanding debt, so you are at risk of having your home repossessed.

Finding low rates on homeowner loans

If you want to go ahead and apply for a secured loan, then make sure you apply with a well-known and reputable lender to minimise your risk against unscrupulous loan sharks.

Read through all the small print before signing up to any type of loan - one thing to be wary of is Payment Protection Insurance (PPI) if offered by your lender. PPI will offer you insurance if you were to fall behind on your payments (through illness or unemployment) - if this were to happen, repayments would be made on your behalf.

Lenders rarely offer PPI these days but you should still consider how you'll make repayments if you are off sick or lose your job. PPI direct from the lender may be more expensive than a stand-alone policy so it's always worth shopping around for other options.