Low Cost Secure Loan Deals for Homeowners

Adam Brand Adam Brand | Operations Director

As a homeowner, you know there are certain advantages to owning over renting. One of those advantages is the opportunity to get a low-cost secure loan based on the value of your property. Such loans are commonly offered through dozens of lenders across Great Britain. These are loans that renters are not eligible for.

A secure loan is one that you can use to finance nearly anything long-term. For example, many people use them to make home repairs or completely renovate from top to bottom. In so doing, they are increasing the resale value of their properties and creating additional equity at the same time. However, you are not limited to just home repairs and renovations. You could use the money from a secured personal loan to:

  • pay for education
  • buy a new car
  • start a business
  • take a well-deserved holiday
  • pay for elective medical care.

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The flexibility of personal loans obtained against the equity in your home means the possibilities are nearly endless. With good credit and enough equity, you could get the cash you need for nearly any purpose. Nevertheless, be cautious. Secured loans do come with one very big drawback: you are using your home as collateral.

Borrowing against Your Home

Technically, a secured loan can be obtained using any sort of tangible property as collateral. Nonetheless, in practice, lenders typically require your home to be the collateral. They will loan you an amount of money equal to the total equity in your property, or perhaps less depending on their loan-to-value (LTV) ratio standards. Everything will be fine as long as you continue to make the payments on schedule.

Should you routinely miss or submit late payments, you will be putting your home at risk. Because your home is collateral against what you borrowed, the bank could repossess your home and sell it to recover their money. There is one other thing to consider as well: the fact that the lender puts a second charge on your property. This means your mortgage has to be satisfied first. If the sale price of your home does not cover both the mortgage and the extra amount you borrowed, you will still be responsible to pay the balance.

Taking Advantage of Equity

Despite having to use your home as collateral, a low-cost secure loan is still an excellent tool for your long-term financing needs. Such loans enable you to borrow substantial amounts of money that can be repaid over a long period. The key here is to get a low-cost loan. Allow us to explain.

Every loan on the market comes with certain upfront costs that are included in the amount you borrow. The upfront costs with secured loans can be somewhat substantial when you consider administrative expenses, appraisals, filing fees, and so on. When looking for a secured loan, the idea is to find one with as few upfront costs as possible. How do you do that? By comparing representative APRs.

In the old days, lenders would only advertise the standard annual percentage rate (APR) on a loan. That APR told consumers how much interest they would pay over the life of their loans. However, the law was changed to force lenders to also disclose the known costs of borrowing. Those costs are combined with the standard APR to produce what is known as the representative APR.

A low-cost secure loan will offer a low representative APR to consumers. A lender might achieve a low representative APR by absorbing some of the known costs themselves, or by lowering the standard APR over the life of the loan. In either case, it makes sense to get the lowest possible representative APR you can.

If you want to make sure you are getting the best deal to suit your individual circumstances why not talk to our team of secured loan experts – there’s no charge for our professional advice.

Our team have access to a whole of market panel of lenders including all the high street named lenders and many specialist lenders that most people won’t even have heard of.  Within a few minutes our experts can show you the best deals available and help you compare them side by side to ensure you are comparing the offers like a professional and making the right decisions. If you are happy with any of the deals our experts make sure you are aware of all the costs involved in getting the loan before you proceed. They will then create and submit an optimised application on your behalf and liaise with the lender to ensure your case has the best chance of a fast approval.

Secured Loan Expert can help you make sense of it all. We are here to assist you in comparing and arranging secured loans for any purpose. As always, we make sure you fully understand the implications of borrowing money before you agree to accept the loan offer.

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