Secured loans are traditional loans and allow you to borrow money at low rates. Secured loans are very much related to the underlying equity in your home. Since, in the past, house prices have gone up, so has the equity in the property. The more equity means the more borrowing power and, consequently, the more capability to take credit in the form of secured loans. Recent figures from the Bank of England show that mortgage equity withdrawal, which is a loan guaranteed against a property, rose to £14.6 billion in the last quarter of 2006. Withdrawals, which are highest since 2004, equalled 6.7 per cent of post tax income.



Secured loans are guaranteed against property of the borrower. In case a borrower makes any default in repayment of the loan amount, the lender has an alternative in the form of a property that guarantees the repayment. The lender can repossess the borrower’s property and sell it recover the loan amount. Since the repayment is guaranteed to the lender, there is hardly any risk that the lender undertakes in case of secured loans. And the less the risk, the less will be returned to the lender. That is why, lenders charge a very low rate of interest in case of secured loans that sometimes fall to as low as 6 per cent per annum.

Lenders in the UK also provide secured loans to people who have been marred with bad credit history. Generally, bad credit history arises out of following situations like bankruptcy, default in repayments, arrears and County Court Judgements (CCJs). Since these bad credit situations deteriorate the creditworthiness of the borrower, it becomes difficult to secure a loan at competitive rates. Lenders always charge a high rate of interest from bad credit holders.

The online loan market in UK has a robust presence. Many borrowers find it very convenient to apply online for secured loans. You too can do it online provided you are a UK resident and meet the age criterion for entering into a loan agreement.