If you own your own home then you should receive a more competitive interest rate by taking out a secured loan then you would if you took out an unsecured loan.

With a secured loan the lender has the added safety feature that if you find yourself in difficulties and are unable to repay the loan, then they can always seek to require you to sell your home in order to repay the loan. This additional safety feature allows the lender to use a more competitive rate of interest.

You obviously have to consider to implications of securing a loan repayment on your home and you should always think carefully about your ability to repay the loan and the ability to continue to afford the monthly loan repayments.

You should also consider if you have adequate protection against risks such as redundancy and serious illness or injury. Accident Sickness and Unemployment insurance cover, often called ASU, can provide assistance in this area. You are however advised to read the terms of this cover very carefully since it is not suitable for every person.

Please also note that you are not under any obligation to purchase ASU cover from the lender providing the loan. Independent specialist providers often provide very competitive terms in this area and in some cases will also allow you to select which sections of the cover you want to purchase. That can be useful if some sections are suitable and others are not.

Because of the added security to the lender secured loans can be obtained for higher amounts than unsecured loans and also for longer periods. Some lenders will go as high as ?100,000 and some will do loans for up to 25 years.

Interest rates will depend on your own personal situation, your credit score, the size of loan and the term of the loan. Monthly repayments can be increased or reduced by spreading the loan over a longer or shorter period of time.

To get the best deal you will need to shop around as the market is most competitive in this area of loans.

The lower interest rates charged on these types of loans means that more of your monthly repayment is going towards paying off the loan rather than in paying interest.

These loans are relatively easy to obtain and the only additional information required by lenders are those connected to the property which you will use to secure the loan on. This will include details such as its current value, do you live there and also the outstanding balance on your mortgage.

With the added security for the lender they may be more willing to accept minor past credit problems such as a single CCJ (County Court Judgement).

About the Author