Sometimes it can be hard to obtain a loan when you have a poor credit history to contend with. Lenders may see you as unreliable and not want to provide you with that much-needed cash injection as you have failed to make repayments in the past or had an item repossessed. A secured loan is something lenders see as highly beneficial when you want to borrow money, because your physical asset is used to backup, or secure, your loan. Not every lender will provide you with a secured loan, but here at Loan Broker we aim to pair you up with the right lender for your unique requirements.

What Is A Secured Loan?

A secured loan is usually where you have an item or asset of collateral that you are securing the loan amount against. In many cases it can be a vehicle, but more often than not the collateral is something much larger and more expensive – such as your home. It is for this reason that a secured loan is also called a home loan, a homeowner loan, or even a second-charge mortgage.

The more expensive your property is, the more you can loan against it for collateral, however lenders will not lend you more than the market value of your home when it comes to a secured loan. You might still be able to lend anything upwards of £25k on your property, releasing that cash to you instantly for any immediate needs you have.

How A Secured Loan Works

There is not much difference between a regular loan and a homeowner or secured loan. You will be given a cash amount upfront to do with as you wish, and then you will make a monthly repayment towards the loan with interest included. The interest can usually be fixed for the life of a loan, however at times it is variable and depends on the amount of money you have borrowed or paid back. When you have signed a home loan agreement, if you don’t keep up with the repayment terms then your home is at risk. The lender will take your property as their own, sell it, take what is owed to them and give you the rest.

What Do I Have To Think About Before Considering A Secured Loan?

Unlike a regular loan, there is a much higher degree of risk when considering a secured loan, and you should aim to explore other options before applying for a homeowner loan. You should first think about what you need the money for, and if you truly need that much money in the first place.

With such a loan, you need to think into the future such as how secure your job is, how much you actually take home in earnings and how much you need to live on. You need to know in advance that you’re able to pay every month even if you lose your job or have other life setbacks.

Do Secured Loans Have High Interest Rates?

No two secured loans are identical, and depend on a variety of factors, such as how much the property you want to use as collateral is worth, how much equity you have in the property, your most recent credit score, and your earnings too.

Most secured loans are some of the most affordable, usually under 10% for the life term of the loan if you have a fixed rate, but variable rates can also represent good value for money too. Know beforehand exactly what you are signing up for as your property might be at risk if you don’t keep up repayments. The longer a secured loan takes to pay back, the lower the interest rate usually is.

What Are The Advantages Of Getting A Secured Loan?

The first major advantage is that you can borrow a much higher sum of money than you would if you were just taking out a personal loan. Under normal circumstances, you wouldn’t get a £20,000 loan for personal reasons, however with a secured loan you can lend tens of thousands of pounds easily, even up to £100k or £200k depending on the value of your home. This is great for conducting home improvements such as a new extension.

A secured loan also means that you can spread the cost over a longer time, many times over 7 or more years. This also brings the monthly payment down to an affordable and manageable rate. If you have a bad credit history, then a secured loan is much easier to achieve than a traditional personal loan.

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FAQs

A secured loan is when the lender legally has the right to sell your property and reclaim the money they are owed if you don’t maintain repayments in a timely fashion. A personal loan on the other hand is against you as a person, not on any of your property.
There is of course the risk factor, because if you don’t keep up with your monthly secured loan repayments, your UKhouse could be repossessed and sold at market value or less. You do have more time to pay the loan back as it’s larger, however this also means you’ll pay more in interest.
Sometimes you might find yourself in a position where you can pay off a secured loan early, but just be sure to check in your contract whether early repayment fees may be due first. If you plan on moving house too, then when you sell the property you might have to repay the entirety of the online loan.
As the loan has been secured against your property, if you continually miss payments for whatever reason, then the lender is able to force you to sell the property and reclaim their money that way. You should always maintain a good relationship with your lender, informing them of any changes.

Find Secured loans – With Loan Broker

Loan Broker is an FCA registered credit broker that operates across the major cities of the UK. All the lenders associated with it are also authorised by the financial regulator. The mission is to promote responsible lending and hence, our lenders perform soft credit checks to offer initial quotes. Soft credit checks are safe as they do not leave any footprint on your credit report and doesn’t even harm your credit report.

We do not charge any upfront fees to our consumers. We offer an array of unsecured loans such as – debt consolidation loans, self-employed loans, to help borrowers get back on their financial track. As a credit broker, we help our borrowers to find the right lender by considering their requirements. With Loan Broker by your side, you can choose no obligation loans. We are loan brokers, committed to extending a true hand of help for borrowers seeking hassle-free, and affordable loans despite bad credit rating.

Borrow responsibly and repay timely.