Three ways you can use a secured loan
What is a secured loan?
A secured loan, also known as a 2nd charge mortgage or homeowner loan, is a loan that is secured against your property (the collateral). As such, this loan has a distinct advantage over an unsecured loan. Primarily, it means that you may be able to take out a higher amount of loan at a lower rate than what would be available to you via an unsecured finance agreement.
Using secured loans can meet the needs of those with poor or minimal credit history. The collateral in your property means there is a higher chance of being accepted. Moreover, you can set the loan for a much longer period which will help keep monthly costs down
If you have equity in your home and want to borrow upwards of £20,000, a secured loan could be right for you. The amount you borrow, the term and the interest rate all depend upon the equity you have in your property, your credit history, and your personal circumstances.
What can a secured loan be used for?
A secured loan is ideal for larger-scale projects or high-value items such as home improvements, renovations, or debt consolidation.
1. Home improvements
A secured loan may be the right option for you if you’re looking to build an extension, convert a loft or upgrade your home. Your home may need:
- Urgent repairs or renovations such as a new roof or a central heating replacement.
- More living space; an extra bedroom, a conservatory, utility room or loft conversion.
- Replacing a kitchen or bathroom.
- Increase the value of your home before you sell.
It’s important to be realistic when thinking about making home improvements, so we’ve put together a guide, including the importance of doing your research and how to apply.
2. Debt consolidation
A secured loan can be used to improve your current financial situation through debt consolidation, lowering the overall amount of interest you pay on that debt and thus reducing monthly payments.
When taking out a secured loan to consolidate debt, it’s important to understand the risks you’re taking when restructuring unsecured debt into a secured loan. Our advisers will be able to help you decide if a secured loan is indeed the best course of action to meet this need.
3. Buying additional properties
A secured loan may be a good option when investing in another property, whether you’re looking to buy a second home or purchase a buy-to-let.
There are several fees involved when taking out a secured loan to purchase an additional property, so ensuring it’s something you can afford before you go ahead is important. At Cornerstone Finance, we get to know our clients and their requirements to find the best residential or commercial deal.
Our advisers have excellent industry knowledge of secured loans to help you identify if a secure loan is the best option for you and, if so, help you find the right loan that suits your needs. Please give us a call on 02921 660 550 to discuss your requirements or request a call back.
