PROPERTY NEWS & ADVICE
Lowdown on Secured Loans
loans (also known as Homeowner Loans because they are secured
against your property and therefore only available to homeowners)
get a pretty bad press. Seen as the last resort of desperate
borrowers, the potentially huge downside of such loans is
that should you fail to make your repayments the lender can
repossess your home. This certainly makes them a high risk
proposition so if you are considering it, you really should
give the matter some serious thought and make sure you do
thing is, secured loans are actually more popular than ever.
Given that they are increasingly marketed as a way of consolidating
debt perhaps this popularity is associated with the rise in
personal debt in the UK.
one should certainly maintain a guarded approach to secured
loans (as one should with any borrowing just more so because,
and you should keep this in mind, the roof over your head
is on the line) that isn’t necessarily to say you can’t
make it work out. Here are a few things to bare in mind:
loans are not the best option for everyone. The principle
appeal of a secured loan is that they can be much larger
than unsecured loans; where typical personal loans are limited
to £25,000, secured loans can potentially be taken
out for between £75,000 and £100,000 and repayments
spread over a longer period.
that the interest on a secured loan is variable; this adds
a degree of uncertainty for borrowers because, unlike most
unsecured loans, the interest isn’t fixed for the
life of the loan and is therefore susceptible to fluctuations
– the recent base rate rises for instance are likely
to have affected rates. This means that you should really
consider whether you could still afford to repay a secured
loan should there be an increase.
lenders won’t allow you to pay off you’re debt
early and will penalise you for attempting to pay off your
debt in advance. If your secured loan is over a year old
and you pay it off early you could get caught out by ‘rule
of 78’ which, without the space to go into detail,
essentially means interest is calculated so that you can
end up paying more than you borrowed. The rule has recently
been banned for more recent loans but those with older loans
should probably look into it.
you’re considering a secured loan it might be a good
idea to make your mortgage provider a first port of call,
they may offer existing customers privileged rates.
a good loan deal can be a complicated and laborious process
– if you’re online it really is worth utilising
the web – check out comparison sites like
or the secured loans section of fool.co.uk. Such sites allow
you to enter your details and how much you want to loan and
run a search for you, saving you a lot of time and effort.
The following table gives you a quick overview of a few of
the top deals:
Alliance & Leicester
Figures correct at time of writing (02/11/2007)
to Property News & Advice