What is a Secured Loan?A secured loan is any loan that is secured on your home or property. It is any loan which requires you to provide
lender with some form of security other than just a promise to pay. The security will be your property or home. The property may be mortgaged or owned outright.
If you agree to a secured loan on your home, you should remember that, although property remains in your possession, it can be repossessed by lender if loan and interest are not paid according to agreed terms. The lender will then sell property in order to recover money you borrowed plus any additional costs incurred in recovering money.
Secured Loan Benefits
In many instances secured loans can be repaid over a longer period with a lower monthly repayment. The interest rate will be lower on a secured loan than on a comparable unsecured loan. A secured loan may also offer more flexible repayment periods.
1. If you’re a homeowner, you may get a lower rate through a secured loan using your property as security. By taking out a secured loan, you are agreeing to allow forced sale (foreclosure or repossession) of asset in order to pay back loan. The risk to lender is reduced so interest rate offered is lower. This is why secured loans tend to be cheaper than unsecured loans and other forms of borrowing. The lender has added benefit of security, which provides protection in event of your inability to repay.
2. Secured loans are more easily accessible to those with a poor credit record. This means that persons who are self-employed, or who have recently changed jobs, or who have adverse credit (ccjs, arrears, defaults, etc.) can take out a secured loan.
