Secured Homeowner Loans

When you are shopping around for secured homeowner loans, you need to ensure that you are comparing the loan products fairly. Secured homeowner loans are usually advertised both by their interest rate and by their APR (or annual percentage rate of change). The interest rate is the actual amount that the loan provider will charge you on top of the loan repayment, but the APR factors in all the other costs that you may incur, such as early repayment charges and the loan application fee. This means that whilst the APR is not an accurate representation of the amount that you will be paying back year on year for secured homeowner loans, it is the best way of comparing two similar secured homeowner loans to establish which is the most competitive overall.

If you are looking for a larger loan with a longer repayment period, secured homeowner loans may seem like the most attractive options, especially as the longer loan term means that the interest rates are more attractive that for unsecured loans. However, it is important to bear in mind the risk that you take on with a secured homeowner loan, because you are guaranteeing your property against the loan. Due to the fact that everyone’s financial future is uncertain to some extent, you may wish to look into loan protection insurance at the same time as secured homeowner loans. This means that if you unexpectedly lose your income, your loan repayments are covered for a certain period of time, giving you a chance to find alternative income without the risk of defaulting on payments.

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Are Secured Homeowner Loans Right for you?

• If you are a homeowner with a mortgage, your eligibility for secured homeowner loans (or "second charge" loans) would depend on how much equity was available in the property.  If you had not yet paid back any of your mortgage, your loan options would be quite limited.
  Your credit history is a significant factor in secured homeowner loan applications, because this will determine the interest rate that the lender will offer you.  If you have a poor credit history, the interest rate will be higher because the lender considers that they are taking a greater risk by lending to you. 
• If you are looking for a relatively small loan (up to £20,000), and would be able to repay it in a short period of time, an unsecured or tenant loan may be a better option for you.   However, if you are looking for a larger amount than this, secured homeowner loans may be the only products that a lender will offer you, particularly if you have had trouble with your finances in the past.  Borrowing against your property comes with large risks attached, so speak to a qualified advisor before proceeding.