Secured Loans, sometimes called Homeowner Loans are a way to raise money by using the equity in your home. Like a mortgage, if you do not keep up with your repayments, you run the risk of losing your home.
There are a number of secured loan lenders on the market all competing for your business and offering different rates, so it important that you shop around and do your research to find the best deal for you.
The amount that you can borrow will depend on the value of your property, your income and ability to repay the loan.
Secured loans will enable you to borrow a larger amount and repay over a longer period of time than a personal (unsecured loan) – up to 25 years. The loans can generally be used for most purposes including home improvements, debt consolidation, business etc. They are usually cheaper than a personal loan as they are secured on your property
There are costs associated with secured loans but these are usually borne by the lender and include a valuation fee and legal fees.
One thing you could bear in mind is that you could ask your existing mortgage lender. It may not suit your needs and it may not be the cheapest, but if you have a good record with them, it could just be worth the trouble of asking.
If you use a Broker or Independent Financial Adviser to help you find your loan, they may charge a fee for their services although sometimes they receive a commission from the new lender and don’t charge a fee.
Remember – A Secured Loan is linked to your property, so if you can’t meet the repayments, your home could be repossessed.