Secured Loans - Best After Mortgages

By: Angelo Drew

The first loan that you take out to buy your home is called a mortgage. It enables you to buy a home without requiring you to pay in full. If it is a 100 per cent mortgage, you need not pay any down payment to the lender. Any loan that you take subsequent to this is called a secured loan.

Secured loans create second charge on your home. It means that in the event of your failure to repay, your home would be used to repay the lender but only after the first charge (mortgage) is fully satisfied. Theoretically, third charge and fourth charge and so on are quite possible but rarely prevalent in practice.

After mortgages, secured loans are the most economical ones. Many lenders in the UK offer these loans at interest rates that start from as low as 6.5 per cent. As a borrower, you can compare different loan products offered by the different lenders and then come out with a competitive loan. APR or annual percentage rate is used to compare loans. Recently, Council of Mortgage Lenders has proposed a better way of comparison called Dynamic Annual Rate. This new interest rate measure would take into account the associated fees and charges, making loan comparison easier and accurate for the borrowers.

Secured loans are available with high street lenders, private online lenders and building societies. You can apply with them and borrow up to ?250,000 subject to available equity in your home. There are some online lenders that offer you up to 125 per cent loan to value ratio. It means that even if your home commands a value of ?200,000, you can still borrow a sum of ?250,000. Secured Loans are very useful when you need big money for your big requirements like home improvement, purchasing a second home, etc.


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