Secured Loans
If you need a cash injection to fund a business investment, to make improvements on your property, or to clear other debts, then a secured loan could work well for you.
Helpful Quick Guides
How is interest charged on secured loans?
Typically, the interest charged on unsecured loans is fixed for the whole period of the loan. The interest charged on secured loans is usually variable, and can shift with the changing tides of the UK base rate, or in line with the lender’s standard variable rate.
Whenever you’re considering a long term loan with variable interest rates, it’s essential you think carefully about whether you’d be able to afford the repayments if interest rates were to rise. If there’s any doubt in your mind, a variable rate secured loan is not appropriate for you. There are some lenders that offer fixed rate secured loans, although the fixed rate will usually only last for a limited period. You should also check the fees and charges, as there can be penalties for paying off your debt early.
How much does a secured loan cost?
As with any loan, there are a number of factors that determine the rate you will be offered. The duration of the loan, your credit score and the amount of equity in your home will all be taken into account. As mentioned previously, secured loans do present a viable option for those with poor credit scores, as the security provided overrides the risk. However, people with poor credit can still expect to pay more for a secured loan.
Can you repay secured loans early?
It is possible to repay secured loans early, but it can be costly. Secured loans are very limited in their flexibility, so even if you have a sudden cash injection from another source, you may not be able to repay your debt early without attracting a hefty fee.
What happens if you miss a payment?
Losing your home is a very real risk with a secured loan. However, generally speaking, it is less profitable for lenders to go to the trouble of repossessing your home, rather than giving you a little bit of extra time if you’re struggling to make the repayments. If you are worried about missing a payment, make sure you contact the lender immediately to explain your situation and possibly renegotiate the payment schedule.
If you miss a repayment, there will also be a negative impact on your credit score. Some lenders will also charge you for producing letters to inform you of arrears on the loan, and this can be added to the cost of your loan with interest.
What should I watch out for?
Go over your plan. At the Mortgage Centres, we take the time to go over your finances with you, and make sure that you’ll be able to meet the conditions of any loan. We help you to see what you can afford, what plans and contingencies you should have in place, and make sure that you’ll be in a comfortable position going forward.
These calculators are great for getting a quick guide, but if you want a completely accurate assessment then you should talk to one of our professional advisers.
Looking for more information on a particular mortgage-related subject? Our expert advisers have written a series of guides to answer your questions.
Feel free to call us at any time to speak to a friendly, professional adviser. Or alternatively, visit a nearby branch to talk to an expert.
