No body would like to sell his/her house for getting money to fund major financial needs. A personal loan or a credit card won't fetch you the required money. Then, where do we go? For innumerable people, the answer is a secured loan that neither will add to their mortgage nor at the same time, give them the needed finances.

Recent surveys conducted by one of the leading financial websites reveal that more and more people in the UK are going for secured loans and debt consolidation is the major reason for it. The months of March and April saw a tremendous rise in the money granted by lenders as secured lending. Alliance & Leicester and HBOS are two of the high street banks in the UK who have declared that they are more interested in secured lending rather than the unsecured counterparts.

Why secured loans?

Some borrowers feel that it's a risky venture to avail secured loans because their home may get repossessed by the lender if they default. However, secured loans are the most viable borrowing options for getting huge sums of money at low APR and added benefits.

Since the repayment period i.e. the loan tenure of secured loans is long, the borrower earns flexibility in repaying the loans. Through a mutual discussion with the lender, the borrower can also choose the interest type on which he wants to reap the loan. Basically, the borrower can select from any of the following interest rate type.

Fixed rate of interest- The rate of interest remains fixed all during the repayment period. So, the borrower does not have to worry about the fluctuating monthly instalments. There is no change in the interest rate at which the borrower is repaying the loan even if the base rate (decided by the Bank of England) increases or decreases.

Capped interest rate- A fixed rate is decided by the lender, say its 8%. If the Bank of England lowers the base rate, the borrower gets the advantage of paying less than 8% on the secured loans in accordance to the change. But if the base rate increases, the borrower need not pay more.

Variable interest rate (Flexible mortgage)- The interest rate will keep on varying as per the changes in the base rate. So, if the base rate increases, the borrower will have to pay more and if it decreases, he will pay less in accordance to it.

So, availing secured loans fetch you many advantages. Flexibility in repayment modes is just one of them.