What Is A Secured Loan
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What is a secured loan?
There are a number of different ways of borrowing money in the UK. One of these is by using a secured loan. Secured loans offer a flexible medium to long term financial solution for UK homeowners that wish to raise finance for most purposes without undertaking a full re-mortgage. A secured loan is a loan that utilises value that would otherwise be tied up in an asset, (normally a home) to offset the risk of lending the money. Generally a secured loan allows you to borrow more than you would otherwise be able to raise via an unsecured personal loan, by offering the equity in your home as security to the lender.
A secured loan is not the same as your original mortgage, as it is an additional loan that allows you to borrow money based on the equity in your home. This type of loan is usually easier to obtain than a regular mortgage and often completes more quickly. However secured loans are similar to mortgages in that the lending company will have certain rights over the property on which it is secured, should you choose or be unable to make the repayments.
Currently, secured loans up to the value of £25,000 are regulated by the Consumer Credit Act 1974. Beyond this amount, secured loans are unregulated by the Consumer Credit Act and typically available up to £250,000 subject to equity and individual circumstances. There are a number of benefits available to those that decide to take out a secured loan as it can provide an affordable way of borrowing for many consumers, as you can often enjoy far lower monthly repayments on this type of loan compared to an unsecured loan, overdraft or credit card. Secured loans are available from a range of reputable UK lending companies and banks, but it is important to remember that the interest rates, repayment periods, and other terms and conditions can vary widely from one lender to another. Because of this it is important to compare a range of secured loans in order to find one that suits your needs or employ a specialist to do this for you, such as an independent loan broker.