There are so many different sorts of loans out there it can often get very confusing trying to decipher one from the other. Secured loans are often at the centre of confusion and people tend not to be able to figure out what they are.
Well, it’s simple really; a secured loan is a loan that is secured against a property, otherwise known as a homeowner’s loan. These loans are different from a personal loan because there is some collateral involved; in this case, it is a property or properties of some sort or another.
These loans will require you to be a homeowner with a mortgage or a paid mortgage. Either way, you must have a home or property of one sort or another. This will be seen as a security and is also known as the first charge if it is still mortgaged. The secured loan will be known as the second charge in this case. If you are in the happy position of having repaid a mortgage and own the property outright, then the loan will take the place of the mortgage and is known as the first charge.
A bad credit secured loan can be a great way to unlock potentially high levels of credit and are a great way for you to get together some money that you may otherwise struggle to get. This can then be used for a big purchase, to consolidate debt, or even to make improvements to your home.
One of the reasons a lot of people tend to take out a secure loan is debt consolidation. If you have a large debt in many areas, a secured loan allows you to repay the full amount. This in turn allows you to cut down on the interest rates and pay off the money in one easy lump sum.
This lump sum may be offered a significantly lower rate of interest than the debts you were trying to meet. Businesses such as Baker Financial often offer quite lucrative rates of interest when compared to the rates you are repaying. It frees you up from credit cards, store cards, and other loans and often lowers the amount of debt you pay as there is less interest owed. Even if you have poor credit, these bad credit secured loans can be a significant help.
Secured loans can also be great if you wish to make improvements to your home or fund a large purchase. This could be required for any number of reasons and a secured loan is a great way of meeting these financial needs.
Of course, in the case of an extension or a home improvement, you are often merely investing in your property and should see it gain in worth with time. This can be a wise move and a great way of using a secured loan of one sort or another.
Home Improvements with a Secured Homeowner Loan
Are you thinking about making some changes to your home? From internal repairs or improvements to major extension work, getting such work done can be time-consuming and very expensive. You need to have enough cash available to make all the necessary home improvements.
A secured loan will usually use the property you own or another valuable asset as collateral. This is mainly to protect the lender from risk, but also lets you borrow a much larger amount of money when compared to a typical unsecured loan. There are also sometimes referred to as a home equity loan.
The other advantage is that you can get the loan at a lower interest rate than normal. The total value of the collateral and amount to be borrowed will also affect what the final rates of interest will be. The only downside of a loan that requires collateral is that it is even more important to keep up with the repayments. Failure to do so can in some cases result in losing your property or whatever asset you used to cover the loan.
APR or Annual Percentage Rate will indicate how much the secured loan will ultimately cost. You will want to negotiate for a low APR to get the best loan deal. Make sure to shop around and compare the different loan terms available. Though, you should know that your credit score will be one of the biggest factors affecting the final rates that you will get.
Those with a good credit history certainly have an advantage. If you have a poor credit rating you can in fact still be eligible for a loan. Sure the APR will be a bit higher, but you can still apply and successfully receive the loan you request by making the most of bad credit secured loans. The security offered reduces the risk on the lender, making them much more likely to lend to you.
The amount you can borrow should also be carefully considered. The total sum you will get will depend on several variables. These include such things as your past credit history, the value of property or asset, and the lender’s terms and conditions.
There are plenty of sources for getting a secured loan. Other than banks and building societies, there are specialised online lenders. These specialists are a good place to approach for getting cheap home loans. The application process is easy to complete, and it all starts with a super short online form.
A secured homeowner loan can be used to borrow as little as £10,000 for a small home improvement project. Though, the total amount can be scaled up to £100,000 or even more if required. This means it doesn’t matter how small or big your home improvement project will be, this type of loan can be the perfect answer to cover all expenses.