All About Secured Loans
Secured loans are available to homeowners who have enough equity in their property to use it as security against the loan.
Secured loans are similar to personal (or unsecured) loans in that the term of the loan is usually much shorter than that of a mortgage. However, secured loans are similar to mortgages in that the amount borrowed is secured against the equity in the borrower?s property.
Secured loans are also called ?second mortgages? as they are technically a second mortgage that is issued by a different lender to the first mortgage and secured on the borrower?s property.
Although the term of secured loans is relatively short, if the borrower defaults on the loan the lender will repossess the property and sell it in order to recover the balance of the loan and any interest owing.
Because secured loans put borrowers? homes at risk, they should carefully consider whether this type of loan is suited to their needs, especially if the property also has a first mortgage secured against it.
However, because borrowers of secured loans provide their homes as security to lenders, interest rates are more competitive than for unsecured loans.
Therefore if a borrower can easily afford the repayments on secured loans and they deem they are not putting their home at unnecessary risk, secured loans may be a more attractive option than a more expensive unsecured loan.
Secured loans are generally only available to home owners who have equity in their property that has been approved to be borrowed against by the lender. Although the terms and conditions between lenders of secured loans can be different, secured loans are not normally loaned above an 85% loan-to-value ratio.
This means that for every ?100,000 of value in the borrower?s property, they home owner will only be able to secure both first and second mortgages against it up to a maximum value of ?85,000.
If the borrowers default on second mortgages, the lender can repossess the properties in order to recover funds. When the property is sold, the fund will be used to pay off the first mortgage before any second mortgages secured against the property are paid off.
This means that second mortgages carry more risk to lenders than first mortgages, and this is one reason why they have higher interest rates.
Visit UK Mortgage Source for up-to-date information on Secured Loans
Secured loans are similar to personal (or unsecured) loans in that the term of the loan is usually much shorter than that of a mortgage. However, secured loans are similar to mortgages in that the amount borrowed is secured against the equity in the borrower?s property.
Secured loans are also called ?second mortgages? as they are technically a second mortgage that is issued by a different lender to the first mortgage and secured on the borrower?s property.
Although the term of secured loans is relatively short, if the borrower defaults on the loan the lender will repossess the property and sell it in order to recover the balance of the loan and any interest owing.
Because secured loans put borrowers? homes at risk, they should carefully consider whether this type of loan is suited to their needs, especially if the property also has a first mortgage secured against it.
However, because borrowers of secured loans provide their homes as security to lenders, interest rates are more competitive than for unsecured loans.
Therefore if a borrower can easily afford the repayments on secured loans and they deem they are not putting their home at unnecessary risk, secured loans may be a more attractive option than a more expensive unsecured loan.
Secured loans are generally only available to home owners who have equity in their property that has been approved to be borrowed against by the lender. Although the terms and conditions between lenders of secured loans can be different, secured loans are not normally loaned above an 85% loan-to-value ratio.
This means that for every ?100,000 of value in the borrower?s property, they home owner will only be able to secure both first and second mortgages against it up to a maximum value of ?85,000.
If the borrowers default on second mortgages, the lender can repossess the properties in order to recover funds. When the property is sold, the fund will be used to pay off the first mortgage before any second mortgages secured against the property are paid off.
This means that second mortgages carry more risk to lenders than first mortgages, and this is one reason why they have higher interest rates.
Visit UK Mortgage Source for up-to-date information on Secured Loans
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