A secured loan – also known as a secured homeowner loan – is secured against an asset, such as your property. Due to this, lenders are more likely to approve a secured loan, even if you have a poor credit history.
Secured loans can be used for a range of different purposes, from home improvement projects to debt consolidation. Unlike personal, unsecured loans, the repayment terms can be spread over a longer period of time to reduce the monthly amount payable – very helpful for those looking for an affordable loan to consolidate debts.
When deciding to offer you a secured loan, lenders will assess the value of your home and your financial history. The amount that you can borrow and the interest rate that the lender offers is then based on:
- Your credit score
- Financial circumstances
- Amount of equity in your property.
Remember, every time you apply for a loan, it will leave a mark on your credit history. What’s more, as the asset is used as collateral, the bank or lender can repossess it if you default on the loan or miss a payment, so you must make sure that you only borrow what you can afford to pay back. As your adviser, we will help you every step of the way.