Unsecured versus Secured
There are several advantages to secured loans. First, you can borrow a larger amount with a secured loan than with a personal loan that is unsecured. For example, many banks and building societies will lend up to £100,000 on a secured loan. With a personal unsecured loan, the maximum advance you are likely to get is £15,000.
You can also take longer to pay back the debt – a term of 15 or 20 years is not unusual with a secured loan, as opposed to five or perhaps 10 with the unsecured option. A longer term usually means lower monthly repayments, but remember that you will pay more in total interest if it takes a long time to clear the debt.
The interest rates on secured loans are normally a lot lower than the rates on unsecured borrowing, but they do vary from lender to lender. It is always best to seek professional advice as to what type of loan and rates will meet your needs.
Lenders will take into account your credit score when they set the rate for a secured loan. However, they tend to be more sympathetic to borrowers with poor credit scores because the loan is secured against your property.
Secured loans are often used to finance home improvements or to consolidate other debts and can be a credit lifeline.
Need some advice?
If you are looking to raise capital from the equity within your property please make contact and one of our fully qualified advisors will be happy to assist.