Here is a useful guide to secured loans. A secured loan is a loan that a lender provides on understanding that a property is secured against loan. Secured loans are also commonly known as a homeowner loan, home loan or home owner loan. Secured loans can be a sensible way to borrow for certain expensive items, such as home improvements or debt consolidation.
This type of loan is usually provided with a lower interest rate than an unsecured loan because you will have secured your property against it. They are normally quicker to arrange because lender has some security to offset against loan should you default on repayments.
A secured loan enables homeowners to borrow capital and offset risk against value of their property. This means that anyone taking out a secured loan is effectively using their property to guarantee loan. If borrower fails with repayments, there could be a possibility their home is at risk.
Because loan is secured against your home, interest rate should be cheaper than an unsecured loan and you may be able to borrow more. One of major benefits of a secured loan is that interest rate charged by lender tends to be significantly lower than that of an unsecured loan.
A lower interest rate, which is calculated as annual percentage rate (APR), means that more of your monthly repayment is going towards repaying original loan, rather than being absorbed by interest you have incurred along way. The interest rate for your secured loan will depend on many factors such as amount of loan requested, terms of loan and your personal details.