A guide to Secured Loans and how they work

Secured loans are becoming increasingly popular, particularly among those who own their own home and want to borrow a more substantial sum but may be struggling with an impaired credit rating. A secured loan is exactly as it sounds: you borrow money and the loan is secured against your property so you have to be a homeowner. In a bad credit situation secured loans generally come with lower interest rates than with sub-prime unsecured loans. That’s because the lender is exposing itself to less risk it has the value of the home to fall back on in extreme circumstances. But this also means that tenants, people in social housing and many others in shared-ownership schemes are not eligible for secured loans. Don’t confuse a mortgage with a secured loan: the former is known as a ‘first charge’ while the latter is a ‘second charge’ and this difference becomes relevant if the borrower become unable to repay the loans (see below). What Secured Loans are available? Secured loans ar
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