A secured loan is money you borrow that’s secured against an asset you own, usually your home. To help you decide whether it’s the right lending option for you, we’re unpicking the pros and cons of taking out this type of loan.
Second charge mortgages from 5.1% APRC. Second charge mortgage representative example (if you choose to add fees to the loan). Assumed borrowing of £29,000 over 139 months, plus a broker fee of £2,850 and lender fee of £367.50 would result in monthly repayments of £406.28, the borrowing rate is 8.6%, the APRC is 11.3% (variable), total charge for credit would be £24,254.73 and the total amount payable would be £56,472.23. Aro is a leading credit broker and not a lender.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
What’s a secured loan?
The name ‘secured’ refers to the fact that a lender will require something as security in case you cannot pay the loan back. Usually this security is an asset, like your home. This is why you might have thought what is a ‘homeowner loan’ when used to describe a secured loan.
What are the benefits of a secured loan?
You can usually borrow more money than with an unsecured loan, and often over a longer period of time. For example, with our lenders, our secured loan amounts range from £5,000 to £2,000,000.
What are the drawbacks of a secured loan?
The main risk of a secured loan is that you have the potential to lose the asset the loan is secured against if you fail to make the repayments. Because of this, you must make sure you can afford the monthly repayments – not just now, but in the future.
Your home may be repossessed if you do not keep up the repayments on a mortgage or any other debt secured on it.
Another drawback of a secured loan is that you can sometimes face early repayment charges and administrative costs if you want to pay off the loan early.
How can I get a secured loan?
Our online search allows you to check if you’re eligible for a secured loan without affecting your credit score. If you are eligible for a secured loan and want to continue, you’ll then need to give one of our secured loan specialists a call.
See if you’re eligible for a secured loan online in minutes. You can also check your eligibility for secured loan over the phone. Give us a call on 0800 432 0142 and one of our team will take you through the process.
What can I use a secured loan for?
Secured loans can be used for many things. Because of the larger amounts and longer repayment terms that are available, many people choose a secured loan for home improvement work and debt consolidation.
Can I borrow a higher amount with a secured loan than with an unsecured loan?
Yes, lenders usually offer lower amounts with an unsecured personal loan, whereas securing the loan against your home means you might have the option to borrow more.
Are interest rates higher with a secured loan?
This depends on your personal circumstances. Often, interest rates on secured loans are lower than on unsecured loans as they tend to have longer repayment terms. However, there are other factors that influence your interest rate, so you might find they’re higher.
Want to know if you’re eligible for a secured loan? Check your eligibility now and get a decision in minutes.
Want to know more about secured loans? Check out our guides and FAQs: