Secured Loans

Secured Home Improvement Loans

Secured home improvement loans are secured loan packages given by lenders against the value of your home which will be used to finance improvement which will add to the property's overall value. So, if you are looking to fit a new kitchen, add a conservatory, change the tiles in the bathroom, turn an office into a spare bedroom, rearrange the garden or any other large scale work this kind of product may be of interest to you. Even if you have a mortgage secured with your property already this should not interfere with the obtaining of secured home improvement loans.

In fact, your current mortgage provider may welcome the move and give you discounts on secured home improvement loans. This is actually one of the great benefits of these kinds of products - lenders are pretty forthcoming with their offers of capital and decent terms due to the number of advantages to their side of the agreement. For one thing there is collateral backing up the agreement, so they can afford to be generous with the terms. Secondly, the money will be used to add value to the securing property, so the collateral itself is getting more valuable as the term wears on.

This does not mean you do not have to have your wits about you when you search and apply for secured home improvement loans. This is a tricky field and there are all kinds of different terms and conditions on products which you need to understand. Despite the potential for good products this does not take away the fact that you are putting your property on the line. Be sure you understand the risks and the potential drawbacks to secured home improvement loans before you apply. This guide will highlight the main areas of concern.

Interest Rates

The interest rate you secure on secured home improvement loans is often the most important piece of information on the whole agreement. This is, essentially, the price tag and you have to be sure you can manage it before you agree to the loans themselves. As it is secured against a property and is for home improvement, the lender is likely to give you a loan with a choice of interest rates so knowing what each one means in advance will help inform your choice. The two most prominent are standard variable rate and fixed rate interest.

Standard variable is the most popular in the UK as it is seen as trustworthy and consistent. It ties your home improvement loans to the lender's standard rate which will increase and decrease along with the lender's performance. Of course having a secured loan on standard rate is better when the economy is up and the rates are down but it is still seen a pretty good bet no matter how things are. Fixed rate begins at a price somewhat above standard but has the benefit of staying there - it will not go up or down for the duration of your agreement.

This is great if standard goes up but if it goes down you may find yourself paying way, way above the regular rate being charged on other home improvement loans. If your credit rating is bad there is the chance you will only be able to get a secured loan by agreeing to an adjustable variable rate of interest. This is a high risk product and should only be agreed to if you have a really solid budget in mind. This rate starts at standard but is guaranteed to shoot up very, very fast. Make sure you are ready for this rapid increase should you decide to take one of these loans on.

Using the Money

There are not many restrictions on the debtor in terms of what they want to use their secured home improvement loan for. The only real rule is that the entity of the cash is used for some kind of home improvement process. Obviously some form of proof of these purchases will be needed but what that will be is down to the secured home improvement loans lender. If you are worried that you may default on the product you have to tell your lender straight away. The earlier you do this the more chance you have to re-negotiate the payment terms you are committed to.

Secured home improvement loans are great ways to get the most out of your property. They give you the money to make improvements to the property with which you secured the loans and thus add value to the price of the house. If you are about to do any large scale work on your property and feel you can manage a term of repayments on your current budget, secured home improvement loans will be a good option for you.