Please find below a sample blog post written for a local finance company website:-
Secured loans, sometimes referred to as “homeowner loans”, allow homeowners to borrow larger amounts at better interest rates than a typical unsecured loan. Secured loans are normally secured against a property, often the family home, but it is possible to secure a loan against an asset other than a property.
Most lenders will require that you have equity in your home to use as security and the interest rate offered will usually reflect the amount of equity, along with your credit history and personal circumstances. If you want to borrow upwards of £15,000 and are a homeowner with equity, then this kind of secured borrowing could be the cheapest type of borrowing for you, as the risk for the lender is lower as they know they can recover the money even if you fail to make repayments. However, you should never take on such debt lightly – as if you default on the loan repayments you could lose your home!
Secured loans are usually repaid over a period of between 5 to 25 years and as long as you have sufficient equity, they are easier to qualify for than a personal loan, because the lender knows they can always get the sum borrowed back. In fact, if you have poor credit history, then a secured loan will probably be the only type of loan you can qualify for!
Most secured loans are fixed rate loans with fixed repayments over the loan term, however, some secured loans are tied to the lender’s standard variable rate, meaning that your payments could go up or down over time. Fixed payments give you peace of mind as you know that your repayments will not fluctuate, making it easier to budget. You should also realise that the headline interest rates offered by the lender to attract applicants, may not be the actual interest rates offered to you! Many loan products have a range of eligibility criteria which could include age and residency. Typically you should be aged between 21 and 65 and have been a UK resident for at least three years with a bank account and a regular income. Quite simply, the more equity you have, the cleaner your credit score and the more disposable income is available – the better the interest rate offered.
Some lenders will charge a penalty in the form of early repayment fees if you decide to repay the loan early, typically this is around one or two months interest. They may also charge a fee for same-day transfers if you need the funds in a hurry. Always check the small print for any fees charged, including any arrangement fees which are often simply added to the sum borrowed.
Secured loans can be used for almost any reason, including debt consolidation or home improvements, but lenders will consider other reasons, though they are unlikely to ask for proof in any case. Debt consolidation is now probably the most common reason for secure borrowing in the UK. Borrowers can cut the cost of existing, expensive credit card debt and other high-interest credit by repaying them all with a lower rate secured loan. This new single loan means just one, smaller monthly payment, making their debt easier to manage and budget.