Secured Loans

A secured loan is simply a loan that is secured by way of a second charge registered on a property.

So what is the difference between a secured loan and a further advance?

Where as a further advance from your mortgage company secures the borrowing as part of the original mortgage charge a secure loan will add an additional charge. The advantage of a secured loan rather than a further advance means that you can shop around for the most competitive and suitable loan for you rather than being limited to the products offer only by that particular mortgage company.

So what is an additional or second charge?

This is a charge registered against the property through the Land registry. It means that if the property had to be sold because you default and fail to make the repayments; the main mortgage would be redeemed first out of the proceeds of the sale. The second charge would then be redeemed, if possible out of the remaining proceeds.

But is it not cheaper just to remortgage?

It can be however most mortgage companies tie you in for a certain period of time. Therefore if you were to remortgage within this time you will incur redemption penalties which can often by quite substantial. In this case it is often a more cost effective option to consider a secured loan.

What purposes can I take a secured loan out for?

This will depend on each lenders individual criteria however; generally the secured loan can be used for almost anything. For example, home improvements, debt consolidation to reduce your monthly outgoings and commitments, a car, a holiday, children's education or college/university fees and lots more.

Where do I go to find the best secured loan for me?

You should search the market for the most suitable secured loan for you. This not only includes a competitive interest rate but the features it offers such as flexibility to make additional payments , possible future redemption penalties, fees, the term that you wish to structure the loan over, the quality of the payment protection offered with the loan ect. This can be done by accessing websites that will search for you and speaking to independent brokers who can search the market for you.

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