Homeowner Loans
Secured loans explained
It’s easy to get confused by financial jargon. So what exactly are secured loans?
It’s not easy trying to navigate the choppy waters of loans. But if you don’t understand the different kind of loans available and what that means for you, it could end up being a costly mistake. If you are confused about what kind of loans to purchase – or what the difference is between a secured and unsecured loans – than check out our helpful guide on secured loans below.
What is a secured loan?
A secured loan means you borrow a sum of money against something of value, usually your home.
Is my home at risk?
As long as you keep up the payments agreed, your home is not at risk.
What is the difference between a secured and an unsecured loan?
An unsecured loan means if you don’t keep up your payments, the lender can take action in the courts to get the money back. You will usually be ordered to pay off the loan in regular instalments set at an amount the court decides you can afford.
What are the benefits of a secured loan?
Because you have put something of value up as security, secured loans are usually cheaper than unsecured loans. Also, unsecured loans are not tied into anything, but if you default on your repayments you could end up being credit blacklisted. This means you wouldn’t be able to take out new credit cards, a mortgage or even take advantage of an interest-free deal in a shop.
Is a secured loan right for me?
Secured loans can help enormously if you are in need of a large amount of money immediately. Before you take on any kind of loan, you should ensure you can afford the repayments. It is helpful to draw up a budget taking into account your income and spending and how that might change over the period you have to repay the loan.
How can I find the best loan?
You need to do your research and shop around. There are however internet price comparison sites online that can do the legwork for you and find the cheapest rate for you.
Some useful guidelines to follow are:
• Shorter loans mean less interest
• Only apply for one at a time
• Check the small print for penalties
• Consider loan insurance in case you fall ill