What to consider when taking out a secured loan (Second charge)

Possibly more challenging than deciding whether or not to take out a loan is finding the best secured loan for your needs. Always bear in mind when selecting your loan the terms and interest rates being charged plus any associated fees. Always compare the fees, conditions and the interest rate before deciding.

Most importantly seek professional advice as to the most suitable and cost-effective loan to meet your needs now and in the longer term. An independent broker will have access to a large selection and will be able to advise you accordingly.

Other things to consider are

  • Is it a variable or fixed rate loan? Remember that variable rate loans may charge lower interest but could change their rate at any time.
  • How long will you have to pay the loan off? The shorter the term, the higher your monthly repayments are likely to be, but also the sooner you will be able to repay the loan. If you’re not confident you’ll be able to repay it in the minimum term offered by the loan provider, a longer term with lower monthly repayments might be a safer bet.
  • How will your credit score impact the rate you are offered? Sure, you can get a secured loan with poor credit, but that doesn’t mean you’ll get the advertised rate, which the lender only has to offer to the majority of applications, not all.

The criteria, much like the loan amount, can often come down to personal preference and circumstances. Generally speaking, the lower your loan to value (LTV) – and therefore the greater amount of equity you have – the better loan you can get. Just like with regular first charge mortgages, a low LTV marks you as being less risky to the secured loan provider, as you’re essentially borrowing a lower percentage of your home’s value.

Need some assistance?

If you would like to know more about secured lending and how it could help you please do make contact and one of our advisers will be happy to help.