An Insight Into Secured Loans

By: Liam G

The main selling point of most secured loans is there large borrowing amount and relatively quick approval. The amount available usually ranges from ?5,000 to ?50,000, although some lenders will consider lending up to ?100,000. Such large sums of money and low APR values are offered because lenders have the added security of the borrower's home as collateral and therefore, don't need to rely so much on a borrower's income, credit history, employment status etc. The collateral usually takes the form of the borrower's home, which is why they are often referred to as homeowner loans.

It is the fact, that lenders can legally repossess the borrowers home if they are not receiving regular payments, which can turn secured loans into such a devastating option. This is why it is vital that anyone wishing to take out a secured loan makes sure they are financially capable and personally responsible enough to repay the loan amount according to the loan terms. In return for taking this risk, borrowers gain a better interest rate and the ability to borrow greater amounts over a longer period of time.

The lower monthly repayments offered on secured loans provide some added flexibility that would prove particularly useful if the borrower ran into unexpected financial difficulty. For example, if they lost their job; the lower monthly repayment would help alleviate some of their financial difficulties.

The amount offered length of repayment and the APR will mainly depend on how much equity the borrower has in their property and also the individual circumstances. Equity is the market value of the property minus any mortgage or other loans already secured upon it. In some cases though, the amount borrowed can be up to 125% of their property's value. This makes secured loans the ideal option for homeowners who want to improve their home, but who do not have the funds readily available.

Secured Loans
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