Learn Why A Secured Loan Might Be Your Best Bet
I need to borrow some money - is a secured loan the best way?
The first thing to note is that a secured loan is designed for somebody who already owns their home. That is because the debt is secured on your home, giving the lender, as the name suggests, some security. While the thought of securing debt on your home might seem daunting, a secured loan is a very common way of homeowners gaining access to some extra finance. While obviously you must think very carefully about any debt you secure on your home, there are advantages to choosing a secured loan over other forms of unsecured credit. For example, because lenders have the security of knowing the loan is backed up by the collateral in your home, they usually offer cheaper interest rates than on unsecured loans or credit cards. Similarly, you can take a secured loan out over a long period of time, meaning you can spread your repayments. Many secured loan lenders offer repayment terms of up to twenty-five years.
What can I used a secured loan for?
It may be than you need to make a large purchase, such as a car, or want to free up some cash to carry out home improvements. Or you may have several different outstanding debts, including credit card bills and unsecured loans, that it is becoming difficult to keep track of payment dates for. In this instance, some people choose to use a secured loan to consolidate their borrowing - that is, they take out a secured loan big enough to pay off all their outstanding debts and to free up any extra capital they need. Doing this can not only work out cheaper, as the interest rate on a secured loan can be significantly lower than some rates charged for credit cards or unsecured borrowing, but it means there is then only one repayment you need to keep track of each month, for the secured loan itself.
How much money can I borrow in a secured loan?
There is no hard and fast rule about how much money a lender will let you borrow for a secured loan. In fact, the amount will probably vary depending which company you apply to. Lenders will look at your current financial circumstances, and assess certain things before making a decision. How much current debt do you have? How much money do you earn, and what are your monthly outgoings? Have you missed any repayments, or defaulted on any loans? Once a lender has a clear picture of how much you can afford to borrow, and how much they are willing to lend based on your individual situation, they will decide how much you can borrow as a secured loan.
If you do think that a secured loan ticks all the boxes for the kind of credit you are looking for, then the best plan is to speak to a financial advisor. They will be able to help you plough through the huge range of products and providers on offer, and pinpoint exactly which lender and secured loan is right for you.
