What are Secured Loans?
Without wanting to state the obvious, it is a secured loans are those which are secured against your home.
Secured loans are also referred to as a second charge loans or occasionally a home owner loans. They effectively sit behind your Mortgage but work in very much the same way.
Each month you would have 2 payments to make, one to your normal mortgage lender as usual and then another repayment to the secured loan provider.
Why would you want a secured loan?
There are various reasons why you would want one. You may want to free up some money in order to do some home improvements or to consolidate other debt you may hold elsewhere either at a higher interest rate or to extend the repayment term to reduce the repayments.
Why would you not just take out a new mortgage?
There are a number of reasons a Secured loan may be the better option:
- Your current mortgage is on a very good rate and you do not want to switch lenders and lose that deal.
- You may be tied in to your current deal and it could be costly to leave and the current first charge lender may not be prepared to lend you more money.
- You may have complicated circumstances meaning you will struggle to get a first charge lender to accept you now.
There are any number of reasons where a second charge loan may be the better option.
What are the benefits of a Secured loan?
Secured loans tend to be quicker and easier to obtain than a conventional mortgage. The affordability rules are very different meaning it can possibly offer you a higher amount of borrowing than a conventional Mortgage. The underwriting criteria is also quite different meaning a secured loan can be much more flexible.
What are the negatives of a Secured loan?
The biggest reason is that it is usually more expensive. But that is not always the case, if you have a very low rate mortgage then you may find it works out cheaper to go down the secured loan route.
How can Mortgage Success help?
We work with a Master Broker for secured loans. This means we give you access to some of the best deals available and also compare the cost and time frames with a conventional mortgage to discuss the best options for you.