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Secured Loans

What is a secured loan?

A secured loan is ‘secured’ on an asset that you own, usually your house.  This means that when you sign the loan agreement, you agree that if you stop paying the loan then the loan company has the right to take possession of the asset/your home and sell it to pay off the loan.  You should, therefore, take the time to fully consider your options and to think about what might happen in the worst case situation.  Loan companies are very good at enticing you in with ‘fast, easy’ loans.  There’s a reason why they’re so keen on your business - just look at the examples below.

Who can get one?

Anyone can get a secured loan, as long as they have something to secure it against.  This usually means that you own a house - you don’t need to own it outright, you may still be eligible for a secured loan even if you already have a mortgage.  If you are a tenant, and have no other assets, you will only be eligible for an unsecured loan.

How much can I borrow?

That will depend on the amount of equity that you have in your house together with the fact that most lenders will only let you borrow up to about 80% of the current market value of your home.  You can see some examples here.

Over how long?

Secured loans can be taken over any amount of time up to 25 years.

What will the rate of interest be?

This will depend on a number of factors, such as the prevailing Bank of England base rate, market conditions, the credit history and circumstances of the applicant and the amount of money borrowed over what period.  Remember that most secured loans have a variable interest rate.  This means that the loan company can increase the rate of interest as they see fit.

How much will it cost to pay back?

This will depend on the amount of the loan, the interest rate charged and the period of time over which the money is borrowed.  We have put together a simple table to give you an idea of how much you can expect to pay.

secured loans