Secured Loans 2019-09-11T11:12:23+00:00


What Is A Secured Loan?

You can borrow money against an asset you own, usually a house or car.  Secured Loans are very popular for with people who dont have great credit and want to use a lender who has competitve APR.  They are a common option for people who want to loan a large amount, such as in excess of £10,000 over a longer term. Remember Secured Loans do carry the risk of you losing the asset you secured against the loan.


Secured loans come with considerable risk, so they’re not to be taken out lightly. Here are some of the things you should think about before applying for a secured loan:

Your financial ability

Think carefully about what you can afford to repay, and whether you really need whatever it is you’re taking out a loan for. Take a good look at your finances and think about future expenses too, such as starting a family or buying a home. You need to be confident that you can make every monthly repayment on time and in full, throughout the entire loan term, even if your financial or lifestyle situation changes.

Your loan-to-value ratio

When you apply for a secured loan, the lender will look at how much equity you have in your property. This is essentially the difference between how much your home is worth and how much you still owe on the mortgage. This information gives the lender an idea of how much money they could recover from selling your home if you can’t repay them. Typically, the more equity you have, the more you’ll be able to borrow.

Interest rates

Most secured loans have a variable rate, and you should factor in the possibility of rate rises when you’re working out what you can afford. It’s also useful to use APRC to compare secured loans – this is the interest rate plus any mandatory fees, so it can give you a better idea of the full cost of the loan. But remember that the advertised rate isn’t necessarily what you’ll get. The rate you’re offered may depend on how much you want to borrow, how long for, your credit score, and the value of your collateral.

It’s crucial to make all payments on time and in full, to avoid losing your home and damaging your credit score. Consider setting up a direct debit so you never forget to make a payment, and stick to a budget so you always have enough to cover them.

The Difference Between Secured & Unsecured?

A Personal Loan (or Unsecured Loan) isn’t attached to your home or any other asset.  The reason being, theres no asset for the lender to claim if you fail to repay the loan amount.  This means its usually only people with good credit that get approved for Personal Loans.

Just as with a Secured Loan, when you take out a Personal Loan you’ll agree to certain terms for repayment, including an interest rate and how long you’ll have to pay back the debt. Credit cards are another option for a line of unsecured credit.

What If I Default?

If you default on a Secured Loan, the lender may have the legal right to take possession of your home or whatever collateral you put up.  This means they can forcibly sell it to regain the money you owe them.  However, if you do find your struggling witht he repayments you maybe able to renegotiate the agreement if you contact them immiediately and explain your situation and the issues your having.

A default is also normally recorded on your credit report which can effect your ability to secure credit in the future.