Secured Home Loan | Would It Suit Your Circumstances?
A secured home loan is a useful way to get a lump sum of money if you are a homeowner. If you need a loan for any purpose and have equity in your property, a secured home loan would be worth considering.
But what exactly is a secured home loan and how does it work? Well, it is simply a loan that is secured on your property, like a mortgage.
Like an unsecured loan you can usually take out a secured home loan for any purpose, for example, to make home improvements, buy a new car or go on holiday. But with an unsecured loan you can often only borrow for a relatively short-term, around seven years. For longer borrowing you may need to take out a secured home loan, often called a homeowner loan which can be taken out alongside your mortgage if required. So you could choose to pay the secured home loan off over, say 10 years, or for the entire duration of your mortgage, depending on your circumstances.
What will it cost?
Obviously the quicker you pay it off the higher your monthly repayments will be, but your overall cost will come down as you will be repaying the debt over a shorter period and so incurring less interest.
Another difference that a secured home loan has to an unsecured loan is that it is usually charged at a more competitive rate of interest, closer to a mortgage rate. However because the loan is secured on your property there are some implications you need to be aware of. For example, if you do not meet your repayments and go into severe arrears, it is possible that your home could be repossessed. With an unsecured loan you end up with CCJs but your property is not linked to your loan and therefore not at the same risk of repossession.
If you think a secured home loan is right for you it is worth shopping around. And the best way to do this is via an adviser who can look at your circumstances and scour the market for you. This way, you get the most appropriate secured home loan for your needs without having to do the hard work yourself.
