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Secured Home Loan

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Secured Homeowner Loan

A Secured Loan is only available to people who own property or similar assets. 

Secured Loans are similar to Personal Loans except for the fact that with a secured loan, property or assets are used as security for the loan, similar to a guarantee of repayment. 

The bad news with secured loans is that if you can't repay the loan, lenders can force the sale of your property or asset to recover the debt. This could mean losing your home. 

The good news is that because there is less risk to the lenders with secured loans, they will often lend larger amounts, over longer periods for reduced interest. 

As with all debt solutions, secured loans need very careful consideration to ensure this is the best option for your unique situation. 

  • Consolidate your debtsOne monthly payment
  • Reduced monthly paymentLower interest charged
  • A new beginningLife back on track

How does A Secured Loan work

If you are a homeowner and you have enough equity in your property then you may be able to borrow against your property or asset.
Consolidate Your Debts
With a secured loan you make just one monthly repayment. If you use the loan to repay all or most of your other debts then it will be far easier to organise your finances.
Pay Less Every Month
With a secured loan you can repay over a period of up to typically 25 years. With reduced interest compared to credit cards, you will probably find that you are repaying less every month towards your debt.
Reduced Interest And Charges
For many people dealing with credit cards, the interest will be significantly higher than a loan. Secured Loans are typically a smaller APR. However, you may end up paying back a considerable amount of interest over time.
Borrow Large Amounts
With a secured Loan you can borrow significantly more than the Personal Loan limit of £25,000. That said, a big factor in the amount that you can borrow will be affordability.

Example of a Secured Homeowner Loan:

This is a before and after example of an IVA. Everyones situation is unique but this will give you an idea of how your monthly repayments would decrease, the amount of time before you are debt free would reduce and how much debt you could write off.

Before a Secured Loan:

Total debt: £18,000
100%
Monthly Repayments: £643
100%
Time in debt: 13 years
100%
Debt written off: £0
1%

After a Secured Loan:

Total debt: £7,200
40%
Monthly Repayments: £120
19%
Time in debt: 60 months
38%
Debt written off: £10,800
60%

The downsides of a Homeowner loan

Secured Homeowner Loans carry significant risks. Not least of which is that your home is at risk if you fail to repay the loan so careful consideration is vital.
Not everyone qualifies
The lender will make the final decision on whether you qualify for a loan or not. Credit rating, affordability, equity in your property will all play a factor.
You could lose your home
Arguably the biggest downside. If you miss payments to the secured loan, the lender would be legally allowed to force a sale of your property to recover the debt.
Increase the time spent in debt
The temptation with secured Loans is to take them over a long period of time in an effort to reduce your monthly repayments. However, this does mean that you will be repaying debt for a long time.
Total interest paid can be very large
APR on secured Loans does appear to be rather low on paper. However, the loans are taken out over a long period of time so the total amount of interest repaid can end up being considerable.
Early redemption charges
Typically, with secured loans there can be a fee charged if you pay off the loan early.
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