Secured Loans

Secured Home Loans

Secured home loans are of great help to those in the UK who wish to raise money off the value of their home and feel they need loans to do so. A secured debt is one which is asset backed. This means some item of the debtors property has been put up as collateral in order to secure the loan. The presence of this collateral puts the debtor at risk of losing it should they default on the loan but it also opens up some great opportunities. Most lenders will be much, much more forthcoming with their products if the debtor is prepared to come forward with some high value property as security.

Secured home loans are asset backed by the actual home of the debtor. This may seem like a really big risk but it is also a really big gain and, as long as the debtor has the budget to repay it in full, it should not be a problem. At the same time, however, no one can enter into these loans without plenty of prior thought. Here we will look a little closer into the process to help you come to a conclusion as to how helpful this kind of secured lending will be for you.

Loans and your Home

The first thing you need to do when you decide that you want secured home loans is to consider what it is you are hoping to get from the agreement. This is a very important question as it will dictate all the other elements of the process. Do you want a home improvement secured loan to do some repairs around the home, are you looking to pay off another credit product, are you looking to buy a different property, are you looking to launch a business or do you just want to raise some quick cash for a one off purchase like a holiday?

The answer matters, as depending on the purpose the kind of loans you can apply for will be different. If, say you have decided to make a one-off purchase like a holiday or wedding you might want to consider doing it with an unsecured credit product like a card or overdraft. The turnaround will be quicker and you won't get as much capital but if it means keeping the house out of the picture it might be a better plan. If, on the other hand, you want to make improvement to the property, secured home loans will be perfect.

Many lenders offer great discounts on secured home loans for improvement purposes as they offer the lender a great number of advantages. They get collateral on the loan itself as it has been secured with property, plus the money will be used to make the property more valuable through improvements. This is an absolute win-win situation for the lender so they will come forward with low interest, long terms of repayment and lots of other great discounts and terms for you. Buy to let secured home loans throw up another set of circumstances again, as you are purchasing another property.

The point is that you should be sure you know what you want to do with the money from the get go. Then you need to make a budget up to be sure you can cover this secured debt. It is surprising how many people take out secured loans and don't even think to make a budget before doing it. It is a recipe for disaster and may well result in the loss of your home when things go wrong. Be sure you can actually afford this agreement before you take it on.

Interest Rates

The interest that is attached to your secured home loans will be greatly influential too. This is essentially what you will be paying on top of the cash you get so you need to be careful and be sure you are using the right rate. As long as you have a decent credit rating you should have a pretty wide choice. The most popular ones in the UK are fixed rates, which stick to an exact rate without going up or down, and standard variable rates, which are attached to the lender's standard rate and go up and down with the company. Some prefer the consistency of the fixed rate but it should be noted that should the standard rate go down you could end up paying way above the odds if you're on fixed.

Loans secured with your home can be great help if you have something you want to do with a large injection of capital. Yet these secured home loans also come with risk. Make sure you know what you are getting into with your secured home loans and be prepared for all the possible outcomes once you sign up.