If you have a property that you can use as a guarantee, then you may well be one of the vast amount of people in the United Kingdom who are eligible to borrow a lump sum of money from a reputable loans company. This is a big decision for anyone and all the factors should be considered before you decide to use your property as collateral for a secured loan. Everything from employment, outgoings, the amount you wish to borrow and the lender you decide to use are all of paramount importance.
How Do Secured Loans Work?
Put as simply as possible, following acceptance for a secured loan and the finalisation of all necessary paperwork, your property will be secured as the ‘second charge’. This means that it will rank behind your existing mortgage which will remain the ‘first charge’. In order for the loans company in question to be certain that they will receive their funds or rights to your property if payments fails, the legal arrangement will be duly registered with land registry.
What Can I Use My Loan For?
Once you have received your funds, you can use the cash for whatever you see fit. Many people consider debt consolidation loans, to enhance the home or for unforeseen circumstances. The only stipulations are that you do not use money acquired via a secured loan for any illegal activities or for commercial gain. There will be monthly repayments that need to be adhered to – secured loans can have terms ranging between 3 and 25 years depending on the amount and lender. If payments are missed then extra charges may be incurred and you may lose your home if the account goes into default.
How Do I Know If I Am Suitable for a Secured Loan?
Each lender will assess your individual circumstances intricately and discuss whether or not you are suitable with you at length. Overall, you need to be in a financial situation whereby you will be able to make the monthly repayments in full and in good time. Due to the fact that your home is used as a guarantee, loans of this type are more suitable for those looking for large loans totalling up to £100,000 or even beyond.
If you are in any doubt at all about whether or not you will be able to make all your loan repayments, then a secured loan on your property is not a good idea.