Personal Loan

With a secured loan, you borrow a fixed amount and then pay it back in regular instalments. You initially agree the rate of interest with the lender, as well as the monthly repayment amount and the length of the repayment term. Some lenders will require that you also take out loan payment protection insurance, to ensure that if you unexpectedly lose your income you are able to continue making the loan repayments. SimplyFinance has articles and tools available to help you find the right personal loan to meet your particular needs.

As you can borrow a larger amount if you secure it against your property, the repayment period is generally longer for secured loans, and the overall interest rate will be usually lower to reflect this. The risk of taking out a secured loan is that if you get into difficulties with your repayments, the lender could repossess your house and sell it to get their money back. Before proceeding, you should check whether there are any financial penalties for paying back your personal loan early, and make sure you are aware of all other charges that apply. Your advisor or the lender themselves will be able to answer these questions for you.

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Things to Check Before You Sign

• What is the APR? The APR (Annual Percentage Rate) should be the deciding factor on how much interest you will pay for your loan.  This rate - an amalgamation of all the costs and fees built into the mortgage - provides you with a much easier basis for comparison than using interest rates. The lower, the better.
• Are there any early redemption penalties? If your home mortgage loan carries an early redemption penalty, you will have to pay a fee for paying your loan off ahead of schedule.
• Does your lender require you to have PPI? Payment Protection Insurance (PPI) is required by some mortgage lenders. This insurance guarantees that your payments will be made if you fall ill or if you're out of work. However, usually you do not need to take this out through your lender, so shop around for the best deal.