A secured loan is based on collateral. In general, the collateral put up for a secured loan is the equity that you have built up in your property by mortgage repayments or by a current, higher market value. For example, you have £200,000 mortgage out for a property that you bought for the same amount. After some years, you have paid off £20,000. This means that you have £20,000 in home equity, that you own £20,000 of your property. The other way to gain home equity is based upon the market. If you bought your property for £200,000, and some years later have it appraised at £250,000, you will have gained £50,000 in home equity. And with this home equity used as collateral, you can apply for a secured loan.
If you take out a secured loan (often used to pay off high-interest credit card debt and to pay for home improvements) and then find that you cannot make your payments, your property will be repossessed by the bank in order to pay off your other debt. As such, a secured loan is often considered to be a more risk-heavy loan.
Having paid back a significant portion of your mortgage and having a good credit score are two of the most influential factors in getting approved for a secured loan. Once approved, you will need to come to terms with the interest rate offered. This is usually based on how much collateral you offer on the secured loan, the amount of the secured loan, and the time frame for repayment.
As with any financial decision, research your current financial situation and all of the secured loan options available to you before making a decision.