Why go
for a secured personal loan
Secured
personal loans have a variety of valid uses but
the mere mention of the name provokes adverse
reactions from many people. Essentially a
secured loan is rather like a mortgage. It is a
loan of money which is secured on your house to
give the loan company additional security in the
event of default. Typically
secured loan personal are used when
there is already a mortgage or first charge in
place, in this instance the secured loan is a
second charge. So they are also referred to as
second charge loans or second mortgages.
So why would
anyone want a
secured personal loan? Well there are a
number of reasons and each persons circumstances
will dictate which direction they go in. If you
are in stable employment, can prove your income
and do not have any credit problems then you
will probably go to your current mortgage
company if you need more funds. However, if you
cannot prove your true income and have picked up
some recent credit problems then a personal
secured loan could be for you.
Personal loans
secured on your property can be arranged fast.
Normally approved within 24 hours and then a few
days until your cheque turns up. This is much,
much quicker than a mortgage loan.
Second charge loans cater more easily for
those people who have a bad credit history. Sure
the extra risk is priced into the interest rate
and charges but what other options are there? As
the loan is secured on a property then the
lender can afford to take a few risks, at worst
they will receive part of the property sale
proceeds to repay a loan in default.
If we look at a
simple example of a person who arranged a
mortgage last year when they had a good credit
history. They would have got excellent terms
from the mortgage company and will be paying a
competitive rate of interest. Sadly in the last
month or so they have got some bad credit and
now need to raise extra funds to pay off some
expensive credit cards. Due to the adverse
credit, their current mortgage company have
turned them down. If they remortgaged the
current mortgage to a new lender (plus the extra
they need) the WHOLE mortgage would be on a less
competitive interest rate and they would pay
more. If however, they left the current mortgage
where it is and then applied for a secured
personal loan for debt consolidation then they
will be better off. Hopefully in a few
years time the credit situation will have
improved and a remortgage option could be looked
at to reduce the cost of the second loan.
Secured
personal loans are often referred to as 'any
purpose loans'. The lender is not really
bothered what you do with the money so you could
use it for:
The choices are
endless so it makes the loan flexible.
Certainly
secured personal loans are not for everyone, but
it some cases it can be the best choice.
Sean Horton is
a Director of
www.loansconnection.co.uk
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