What Is A Secured Loan?
A secured loan is a loan which is secured against something of value which you own - normally your home. This means that should you not pay back the lender, known as "defaulting" on the loan, they can then force you to sell your property, in order to retrieve their money.
This being the case, then why would anybody take out a secured loan?
Well the first reason is that secured loans carry less risk to the lender, and therefore come at a lower rate of interest, meaning you pay less back over the term of the loan.
Secondly, in the current market at least, there is an upper limit of £15000 on unsecured lending i.e. if you wanted to borrow more than this you couldn't do this with an unsecured loan.
Finally, if you own a property and default on the loan then there is a good chance that the lender will look to place a charge on your property anyway, in effect making it secured.
Obviously, nobody should consider taking out a loan if they believe they might not be able to keep up with the repayments. This being the case, certainly in the current market, it would be beneficial for all property owners to at least consider a secured loan rather than an unsecured one.
