Secured Personal Loan
- Improve your home
- Consolidate your debts
- Pay for private surgery or education
- Enjoy life
Many people decide to take out a loan to pay off their debts or spend the money on something that will benefit their lives. The big question is; which loan is best for you?
With so many unreputable providers and skyrocketing interest rates, finding a beneficial borrowing solution can feel like you’re freediving into shark-infested waters.
Luckily, there are many reputable providers, and Believe Loans is here to guide you towards the best loan agreement for your needs.
Our advisors can help you to secure financing and get excellent terms so you can benefit from your loan without worry.
What are secured personal loans?
The two primary options for borrowing money are secured loans and unsecured loans. Many choose secured loans because they’re easier to get and often come with more favourable interest rates and terms.
To be eligible for a secured loan, you must be able to offer an asset as security, which is often property. The collateral serves as a buffer for loan providers, so you could lose your property if you don’t meet your monthly repayments.
However, using this type of loan agreement ensures you can borrow more money and pay it back over years instead of months.
Unsecured loans don’t require any collateral, but if you have poor credit, you probably won’t be eligible to receive one. Also, these loans are usually capped at a maximum of £25,000 (depending on your circumstances).
You can use a secured loan to:
Improve your home: A secured loan can provide an instant cash injection if you want to add an extension or renovate your property.
Consolidate your debts: Avoid paying high-interest rates on your credit cards or other debts by merging them into one affordable payment.
Pay for private surgery or education: Get the surgery you need quickly, or use the money for a cosmetic procedure. You can also use the loan to pay for a course or private schooling.
Enjoy life: Secured loans can also pay for that dream holiday or a new car.
However, it’s best to consider whether you can afford to pay for luxuries like cars and holidays before getting a secured loan because it’s still a big decision.
How secured loans work
If you’re accepted for a secured loan, you can borrow more money than an unsecured loan allows. For example, if you have a lot of collateral and good credit history, you could receive a loan that exceeds £100,000.
Once you agree on the terms, your loan will come into effect and you’ll pay the monthly amount previously arranged with your lender.
However, your loan-to-value ratio might vary depending on the value of your equity. Most lenders only offer a maximum loan-to-value ratio of 80%, but this will be lower if your credit history isn’t excellent.
The interest you pay depends entirely on your circumstances and your chosen provider. If you have a good credit score and decent collateral to offer, you could secure an interest rate of 2%, but some providers will offer 10%.
Poor credit scores might result in higher interest rates, but you’ll usually pay less than a secured loan.
Providers offer a range of payment terms, and if you can prove your financial stability, you will likely secure a more extended period. For example, you might find one provider that offers a 25-year repayment term, but another will expect you to pay the money back over five years.
Secured and unsecured loan: which is better?
When choosing the best borrowing solution for your needs, there’s no right or wrong answer. For some people, an unsecured loan might be the only option available, and it’s the same with secured loans.
Let’s take a look at the pros and cons of each.
Unsecured loans pros:
You can borrow money without sacrificing your assets
Unsecured loans don’t require any collateral, so if you don’t have a property you should still be able to receive one – as long as your credit score is good.
Simple application process
One major benefit of unsecured loans is that you can access them quickly, and they’re not just available through banks. In some cases, you can secure a personal loan in 24 hours.
Unsecured loan cons:
While unsecured loans can be convenient, they often come with high-interest rates, which can be incredibly expensive. People often get an unsecured loan on impulse and then realise that they’re paying back a lot of money over a short time.
You could get in trouble with lenders
Lenders expect their monthly repayments on time, and if you fail to meet your obligations, you could find they begin to harass you. If the lender takes you to court, you’ll also be liable to pay any associated costs, your original loan and the incurred interest.
You won’t get a large loan
As you pay back an unsecured personal loan over a shorter time, you won’t get as much money as a secured loan offers. Also, the provider will check your credit rating, so they’ll offer a smaller amount of money if it’s not excellent.
You won’t get an unsecured loan with poor credit
The criteria for getting an unsecured loan is to have a good credit rating. If you don’t, a lender won’t see you as a viable candidate, so many people fail to get approval for financing.
Secured loan pros:
You can borrow larger sums of money
As you offer collateral against your loan, a lender is usually willing to provide more money, as long as your equity can cover any defaults. You’ll have to subtract your mortgage’s outstanding balance to determine how much you can borrow, but it’s usually more than an unsecured loan.
Your credit score doesn’t need to be excellent
Secured loan providers look at how much equity you can offer and whether a property is a valuable asset. If your credit score isn’t excellent, it doesn’t mean you won’t be able to borrow money, which is one of the most prominent benefits of these loans.
Secured loans are more flexible
While unsecured loans come with a lot of criteria, a secured loan is suitable for any legal purpose – except for gambling. You can use the loan for home renovations, debt consolidation or spend it on a holiday or a new car.
Longer repayment terms
With many secured loans, you have an extended repayment period which means you’ll pay less monthly. However, you can also pay more and shorten your total repayment.
It can boost your credit score
When you meet your monthly repayments, you can boost your credit score. Once you improve your credit score, you’ll have more borrowing options in the future.
Secured loan cons:
You need to have collateral
While some loan providers might offer money if you have a car or other valuable assets, most prefer property as equity. If you rent or don’t have enough equity after subtracting the outstanding mortgage amount, you won’t be eligible for a loan.
The interest can mount up
If you choose to pay back the loan over a longer period, your interest rates will lead to you paying more money. However, secured loans are highly convenient, and most people are happy to pay back extra interest because they can stick to the affordable repayments.
You might lose your property
Perhaps the biggest disadvantage of getting a secured loan is the potential risk of losing your property. However, this only happens when you don’t meet your payment obligations, and it’s highly avoidable.
Lenders often use this as a last resort, so most will offer an alternative solution if you’re struggling with your monthly payments.
Why use Believe Loans?
Are you struggling to find the best secured loan deal? Believe Loans is a specialist broker that can help you find the best financial solution for your needs. We have access to a wide range of lenders and can help you get the most competitive rates available.
Secured loans can be a great way to borrow money, and with our help, you can get the best deal possible. We’ll work hard to ensure you get the right repayment terms, so you can focus on what’s important – your life.
When you choose us as your secured homeowner loan broker, you get:
To select from a range of lenders: We have so many lenders that we partner with and are confident we’ll be able to find you the best loan provider.
A headache-free application process: We guarantee a simple application process when you work with Believe Loans. Many think secure loans are harder to get, but we make the process easy.
Five-star customer service: We have your best interests at heart and won’t stop until we fulfil our commitments to you.
Complete transparency: With us, you get full transparency with no hidden charges. You’ll know exactly what you’ll spend from start to end, so you won’t have to worry about nasty surprises.
Contact us today to compare secured loans and find the best deal
Believe Loans is not a lender, so our job is to find you the best provider. As a broker, we have your best interests at heart, so you can rest assured that you’ll take advantage of our convenient and cost-effective service.
Secured loans can open up a world of opportunities, and as long as you meet your monthly repayments, you’ll be able to benefit from them.
Contact us today for a free consultation, and we’ll get the ball rolling.
Can I pay my secured loan back early?
Most secured loans allow you to do this, but they might have early repayment fees. However, if you want to become debt free and can afford to do it, the early repayment charges are worth it
How much can I borrow?
The amount you can borrow with a secured loan agreement depends entirely on your circumstances. Providers will probably offer more money if you have a lot of equity and a good credit score.
I have good credit. Should I choose a secured or unsecured loan?
It’s entirely up to you, and having good credit certainly opens up more financing opportunities. However, you won’t be able to borrow much money with unsecured credit, and the terms are shorter.
How It works
Simple, easy application
We search our panel of lenders to find the deal that’s right for you
When you confirm your chosen deal, we get your application moving
The money lands in your bank
account – usually within two weeks
We compare loans from our panel of the UK’s top lenders to get you the best deal.
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