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What is a Secured Loan and what are the risks? (Page 1 of 2)
A Secured Loan is a loan secured on the homeowners property very much in the same way as a Mortgage is. A Mortgage on a property is known as the 1st Charge a Secured Loan therefore becomes the 2nd Charge. If a Secured Loan is never paid then obviously the Homeowners home is at risk. With the Mortgage company having the 1st charge they therefore reclaim their money first. A Secured Loan Lender would then follow as they are the 2nd charge. It is worth remembering that a Mortgage and Secured Loan Company would only ever repossess a property as a last resort.
A Secured Loan is ideal for Homeowners who are looking to raise finance by using their home as security. Traditionally a Secured Loan can provide Homeowners with a lower APR than that of an Unsecured Loan. Obviously a Loan Lenders APR varies depending on the personal circumstances of the applicant. A Secured Loan can be used for a variety of purposes. The most common Secured Loan purposes are for Home Improvements and for Debt Consolidation.
Home Improvement Secured Loan
A loan that is secured on the applicants home address for the purpose of Home Improvements. The loan can be used for a new conservatory, renovations, extension or simply for double glazing. Almost any form of home improvements can be funded by a secured loan. You may find that some secured loan lenders will require proof of what you will be using the funds for. This can be provided by simply gaining a written quote from someone who you are looking to have the work done by. Chances are a Home Improvement Secured Loan will actually increase the value of your property so it will be money well invested.
Debt Consolidation Loan
A loan that is secured on the applicants home address for the purpose of Debt Consolidation. The loan is generally used to consolidate (pay off) all existing credit by putting it into one secured loan and this generally reduces the monthly payments and therefore frees up more of your monthly income to use for more exciting purposes than clearing credit cards, store cards, loans or hire purchases! Sometimes the only way in which the monthly payments can be reduced is by taking the Secured Loan over a longer period than what the existing credit is currently on. This can increase the amount in total that you will pay back but customers who take a Debt Consolidation Loan generally are more interested in the reduced monthly outgoing on credit.
A Secured Loan can be used for other purposes besides Debt Consolidation and Home Improvements. They can also be used for a Car, Holiday or Wedding. Generally Secured Loan lenders do not raise finance for Business. For a Business Loan it may be a better route to contact your local Bank or Building Society. Why would I want a Secured Loan instead of an Unsecured Loan?
There are many reasons why.
Repayment Period A Secured Loan can normally be taken over a longer period than that of an unsecured personal loan. Unsecured Loans can normally only be taken over a maximum of 7 or 10 years. Some Secured Loan Lenders will allow the applicant to take the finance over a 30 year period and most will allow the finance to be spread over 25 years worth of payments. Obviously by taking the loan over a longer period reduces the monthly payment to the applicant although you must remember the longer you take the loan over the more interest you will pay.
Home Equity Loan online: get the best of funds
The basic function of your home is to save you from natural odds and provide a safe and secure space for you and your family. But with changing time and trend, it can also be used to meet your financial voids. How is it possible? The answer is that your home contains certain equity value, which keeps on increasing. So, when you are in dire need of some amount of money, you can resort to home equity loan online. Through this loan, you can derive finance based on the equity value, which further can be used to serve other purposes as well.
Home equity loan online, as the name suggests is a secured loan, where in the equity present in your home acts as collateral. As the loan is insured against an asset, you get to derive the loan at comparatively low rates. The money derived can be utilized to serve a number of purposes such as purchasing a car, going for a vacation, making home improvements, education purposes and many more.
This loan is further categorized in to lump sum home equity loan and HELOC, short for home equity loan for credit. Lump sum home equity loan is where you can grab the entire amount to meet your various requirements. On the other hand HELOC is a loan from where you can derive the money at regular intervals and paying it off subsequently. However, in the case of both this loan option, the monthly repayment is based on the total outstanding balance of the equity of your home.
For the application of the loans, all you have to do is to browse the internet. Online availability of the loan implies that you can access the amount instantly and that too at relatively better terms and conditions. The fact that the presence of large number of lenders results in increasing competition and this is one chief reason why you get to avail the loans at comparatively cheap rates.
A home equity loan online turns out to be an ideal choice for a home owner, as it provides the best of finances at the best possible rates.