I think that it's pretty safe to say the majority of
secured loans are secured against property because that
basically the only appreciating (or non-depreciating)
asset that most people possess. So it goes without
saying, if you don't pay back the loan then the bank can
step in and forcibly sell the house to recover the loan.
But hey, that's no different to the terms of a mortgage
so that's no reason to be put off.
Why Secured Loan instead of
Re-mortgaging?
In the short term a re-mortgage almost certainly seems
more attractive because the repayments would undoubtedly
be lower, probably much lower, simply because you are
paying the money back over a much longer period of time.
However, the amount that you actually end up paying back
will be far greater with a re-mortgage than with a
secured loan taken over a shorter period of time,
although the effect of inflation would probably erode
the difference.
But anyway, the ability to eliminate the debt over a
shorter period of time is what generally attracts people
to opt for a secured loan instead of re-mortgaging.
Why Secured Loan instead
Unsecured Loan?
The maximum advance on an unsecured loan is usually
£25,000 but you can probably borrow up to £75,000 on a
secured loan.
Also, you need a good credit history to tempt your
bank manager into giving you an unsecured loan whereas
once you waive a bit of security under their nose
they'll be asking you how much you want to borrow.
How risky is a Secured
Loan?
Every type of loan/mortgage is a risk if you don't repay
it so you simply need to ensure that you don't
over-stretch yourself or put yourself in a vulnerable
position. Bear in mind that secured loans
generally come with a variable interest rate and
therefore if the bank base rate shoots up, so will your
repayments. If you need to budget then you might
be better suited to the types of options available with
re-mortgaging.
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