Secured loans are available to all homeowners who have equity in their property. Equity is the difference between your mortgage balance and your property valuation. The difference between the two is how much you can borrow.
Secured loans are also known as homeowners loans as they are only availble to homeowners who have an exsisting mortgage on their property.
Homeowners who own their property outright would not qualify for a homeowner loan as a secured loan is a second charge and has to be registered after their mortgage. If your mortgage has been paid off a second charge cannot be registered.
With secured loans being secured on property the rates are usually lower than unsecured lending, and due to this secured homeowner loans are the cheapest way for homeowners to raise extra money.
Secured loans are more flexible than unsecured loans as you can borrow a lot more and you can also take a secured loan over a longer period of time and you can also borrow a lot more with a secured loan than you could with an unsecured loan. Most unsecured loan lenders will have a maximum that they will lend but with secured loans you can borrow really as much as you want to borrow.
Secured loans can be used for any purpose ie. debt consolidation, holidays, and home improvements.
To be eligible for a secured loan you will have to have sufficient equity available in your property and the secured loan lender will also look at your affordabilty to make sure that the secured loan is affordable to you and you are not grossly over committed and cannot afford the repayments at the end of the month.
When a lender is accessing affordability, they will take into account your current mortgage repayments, outstanding existing commitments that you have such as loan repayments, credit cards repayments and catalogue repaymnets and by assessing this they make sure that a secured loan is affordable to you.
If you have bad credit or have credit cards or loans in arrears this should not create a problem in you being granted a secured loan. However the interest rate you are given might be a little higher. The reason that the interest rate will be higher is the lender will be taking a little bigger risk as to lend money to those that have a excellent credit score.
There are a lot of different secured loans lenders and some that specialise in different circumstances. Some lenders will only lend to people with a good credit history while other lenders specialise and only lend to people with not such a good credit score.
When considering taking out a secured loan you should have a look online as there are many comparison sites and most will have access to a lot of secured homeowner loan lenders. They will list on their websites. Some information regarding these lenders, such as the interest rate and to whom they will lend . If you do not have a good credit history this is none as subprime and if you have a good credit score this is known as prime.
Author: LizMoirThis author has published 8 articles so far. More info about the author is coming soon.