Secured Loans Uncovered

Moving debt accrued for everyday items and securing it on your property makes little financial sense. However in specific circumstances it can be just the right decision. They're also extremely popular, so it's better to understand them first, then decide if it's still your best option, then make sure you do it the best way (as detailed below).

What Is a Secured Loan?

The 'secured' bit means the lender gets security over your property, so if you can not repay, the lender can repossess your home. Which means that only home owners (mortgage holder's) are able to be considered for this type of loan. In contrast personal loans are 'unsecured' so there is no link between the debt and your home if you are unable to repay. Technically an unsecured lender could go through the courts to obtain a 'court charging order' on your home but it is much more difficult and unsecured lender's are not likely to.

So Why Would Anyone Want a Secured Loan?

• Because the lender takes security by way of your property, it is much easier to obtain a secured loan. Particularly if you have a poor credit score. Lenders are much more willing to lend even if you have a bad credit history, due to the security provided by your home.
• You can borrow much greater sums of money £150,000+ is possible, compared to a maximum of £25,000 unsecured.
• Secured lender's offer loans over longer periods of time, the longer the better for the lender as this helps offset the expensive setup costs. Terms range from 5 - 20 years compared to unsecured lending which is typically restricted to 7 years.

£10,000 at 11% over 5 years is £272.42/ month with a total repayment of £13,045.45 of which £3045.45 is interest.

£10,000 at 11% over 10 years is £137.75/ month with a total repayment of £16,530.00 of which £6530.00 is interest.

£10,000 at 11% over 10 years is £103.22/ month with a total repayment of £24,772.52 of which £14,772.52 is interest.

As you can see taking the loan over 5 years instead of 20 years could save you a staggering £11,727.07!!!!

How Much To Borrow and How Long For?

First, list all your existing debts on a piece of paper with the current interest rate along side. Once you know the rate of the secured loan put this onto the list, fitting it in between the interest rates that are higher and lower. Only borrow enough money to pay of the debts that have higher interest rates.

There's no need to consolidate all debts if it means you end up taking a loan over a much longer period of time, as this could cost you more in the long run (see above).

You must also be aware that you could be swapping fixed interest rates for variable interest rates. Most unsecured loan interest is fixed, most secured loan interest is variable and can fluctuate with movements to the bank of england base rate and with changes to the lenders base rate. Because of this you must ask yourself, 'could i afford this if interest rates went up?'. If not, don't do it.

In short, borrow only what you need, over the shortest period you can comfortably afford the repayments on.

What Does The Rate Depend On?

The main factors which will affect the interest rate are:

• Amount of loan
• How long the loan is over

• How much equity is free in your home - The difference between the amount you owe (mortgage amount) and what the property is worth. The bigger the difference the better the rate
• Your credit score - depends on many factor, the main ones are, income and outstanding debt, arrears (behind with payments), defaults (failing to make repayments), County Court Judgments or CCJ's Repayment failures taken to court) or bankruptcy (legal judgment to relieve a person of all past debts). (Creditexpert help with credit rating.)

The Worst That Could happen?

You can lose your home! However, thankfully, it is less profitable for most legit secured loan lenders to repossess homes than have the debt repaid. If you mightn’t be able to make a payment, or you get behind with repayments notify the lender immediately. It maybe possible to renegotiate the repayment schedule with them.

Failure to repay has an immediate negative impact on your credit score, plus lenders’ letters informing of arrears are often charged for, added to your account with interest, effectively a missed repayment penalty. At this point again consider talking to the free debt counselling agencies.

If all fails, the lender will repossess your house, petitioning the court to demonstrate you’ve been unreasonable; refused to sign letters or pay your newer repayment schedule. After that it’ll empty the property of you, your family and your possessions, sell the property (probably at a low price for a quick sale) take what it’s owed and its costs and give you the leftovers (if any).

How to find the best rate

The best way to find a secured loan that is right for you is to talk to a loan broker and get quote.

Use Other Brokers to Compare Quotes

Loanspage

Loanspage are a master broker, meaning they search for the best deals from a panel of lenders. Check out our Loanspage review.

After you have filled in your loan application form with Loanspage, their system quickly and automatically matches your details against all of our available database records. When a match is made your details are transmitted to the selected financial institution through the power of the Internet.

They can have your details with a financier electronically in 60 seconds!

You don't have to complete an individual form for every loan or mortgage application that you make.

After the financier has received your details, they will process your application and contact you either to make you an offer on a loan, mortgage or remortgage or discuss with you further what other options could suit you better.

Stay In Control.

You can log into your account 24 hours a day to stay in control. Once you've received enough offers, sign into Loanspage and switch off the loan searching service. Considering a loan in the future? Just freshen up your loan details and switch on the loan searching service again. Simple.

Loans4

Loans4 are a national UK loan broker arranging loans for all types of purpose, for people with good or bad credit history.

Use the Qualify loan selector to find out which loan repayments and APR's you qualify for. Like Loanspage they will match your details to the most appropriate lender at the lowest possible rate. Advertised rates will tend to be available for people with the best credit ratings, the worse your credit rating is, the higher the interest rate.

Once you've established what you qualify for, you can apply using the loan application form. After you complete it, you will be contacted within an hour to have your loan offer confirmed, the paper work is posted within 24 hours. Complete the forms and return them along with any other information requested. You're loan will processed!

Imagine Finance

Imagine Finance are specialists in arranging secured online loans and UK homeowner loans at the best rates to suit your personal circumstances. Online secured loans are available for all homeowners, including self employed and those with CCJ's, arrears, adverse credit, or bad credit history.

Loans are available from £5000 - £250,000 Imagine Finance aim to complete successful loan applications for any purpose with 14 - 28 days.