Apply For A Secured Loan? Wouldn't An Unsecured Loan Be Better?

So, you're a homeowner and you want to borrow some money? You'll find a range of options before you and all of them pretty straightforward these days.

Besides secured loans, there's:-

• credit cards and store cards
• unsecured personal loans, and even
• remortgaging

...to name but a few. So why should you want to apply for a secured loan?

Well, first of all, a secured loan is so called because it's "secured" against the equity in your home. That's why they're often called  homeowner loans. It's a guarantee if you like, that in the event of you not being able to pay it back for whatever reason and your lender cannot find a suitable alternative arrangement, they can enforce the sale of your property and take out of the proceeds, the amount they are owed. This is obviously undesirable for both parties but it does still happen in extreme cases.

Easier To Get?

As a result of their being a much reduced risk to the lender, a secured loan may be easier to get than an unsecured loan, even for those with a comparatively poor credit rating.

That doesn't mean that you can borrow however much you like. There may still be a ceiling that the lender is prepared to offer and don't forget not to borrow more than you feel you can realistically afford to repay each month. You wouldn't want to take that kind of risk now, would you? ...and talkng of which, you could even insure your loan against you being made unemployed through sickness or redundancy. Many people prefer to do this for the extra peace of mind it brings.

Lower Rates Of Interest?

Whilst an unsecured loan may well be quicker to arrange than a secured homeowner loan because you won't need a valuation on your property for instance, a secured loan may benefit you with potentially lower interest rates, aligned to your financial circumstances (relative level of risk to the lender).

A lower APR may reduce your monthly repayments and the total amount you will be paying back over the lifetime of the loan.

With today's property prices increasing in most cases, you could use some of that capital gain on something you really want, such as:-

• home improvements
• a new car, motorbike or caravan
• a luxurious 5 star holiday
• or even just to consolidate some or all of your existing credit into one monthly repayment.

Some people say that it gives them the chance to enjoy what they've worked so hard for over the years.

There'll always be a place for unsecured loans but the greater flexibility offered by secured loans may just be what you're looking for.

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