What is a secured loan?
A secured loan, also known as a Homeowner Loan is a loan that is secured against your property. This means that you’re able to borrow larger sums of money usually at lower rates. A Homeowner Loan allows you to borrow £20k+ to purchase anything from a car to home improvements.
What are the benefits of a Secured Loan?
- Lower interest rates
The interest rates for Secured Loans may be cheaper than those attached to unsecured loans. This can make a homeowner loan more affordable every month.
- Higher loan amounts
Simply speaking, you can borrow more with a Homeowner Loan. Offering your home as collateral reduces the risk for lenders, so they’re happy to trust you with a larger loan amount.
- Apply with bad credit
If you struggle to get accepted for a personal loan and you’re a homeowner, a secured loan could be a good alternative. Thanks to the added security of your home, some lenders consider other factors than simply your credit score.
What are the risks of a Secured Loan?
If you make all of your repayments on time and in full, the loan should be risk free. However, you could put your home at risk of repossession if you repeatedly miss payments. Before you get to that stage, it’s essential to raise any issues with your lender.
Can I apply for a Secured Loan if I have bad credit?
Yes, you can apply for homeowner loans with bad credit. As you are using your home for collateral, you are considered less of a risk to lenders, and so you’re more likely to be accepted – even if you’ve had problems dealing with debt in the past.
What can I use a Secured Loan for?
You can use a homeowner loan for virtually any purpose. As you can receive large amounts of money with a secured loan, many people use their loan to buy items (cars, wedding, holidays etc) or consolidate expensive debt. Common ways to use a homeowner loan include:
- Home improvement projects
Building a conservatory or buying a new kitchen doesn’t come cheap. For many people, taking out a secured loan is a way of affording costly home improvements.
- Debt consolidation
If you’re juggling lots of different repayments, you could consolidate your debts with a second charge loan. You could repay all of your debts with the lump sum and roll them into one repayment plan.
As homeowner loans may come with lower interest rates compared to personal loans, you could save money on a monthly basis. And with less monthly payments to think about, it could make life simpler too. It is worth noting that doing this may be extending the terms of the debt and increasing the total amount you repay.
- Early release from a mortgage
Use the funds from a Secured Loan to pay off the remaining balance on your current mortgage. This would also give you the opportunity to potentially buy your second property.
How we can help?
We have a dedicated team at Cornerstone Finance who deal with Secured Loans, meaning they have a wealth of experience when it comes to finding a loan for whatever you need. Get in touch with one of our friendly advisers today.