Compare Secured Loans

A lender who offers secured loans requires the borrower to provide some sort of guarantee for the loan to be reclaimed if regular repayments are not met. In most cases this guarantee is made on the borrower'?s property, therefore only homeowners are eligible to apply for secured personal loans.

Loans taken out against a property that is owned outright are called first charges, whereas those taken out against a property with an outstanding amount left on the mortgage are known as second charges. This is because if repayments are not met and the loan company needs to reclaim the property to recover the remaining unpaid loan amount, the mortgage company have first claim on any equity released and only then will the loan company be able to take the funds they are owed.

The amount available on a secured loan tends to be larger than that offered through an unsecured channel; this is because the lender has a guarantee that one way or another they will be able to reclaim their funds. Loan amounts may be anything up to 125% of the value of the secured property but tend to be between £3,000 and £100,000, although a higher amount may be possible.

The interest rate applied to a secured loan is dependent on the amount borrowed, the value of the property against which the loan is secured and the personal circumstances and credit history of the borrower. Although interest rates are likely to be higher for those with a poor credit history, in general, secured loan companies (especially those who specialise in bad credit loans) are more willing to lend to individuals who fall into this category because of the security provided. This also applies to others who may find it difficult to obtain unsecured credit including the self employed and those who work on a contract basis.