Secured Loans
What is this?
Sometimes called personal loans or second charges, these loans are be secured on property on which there is already a mortgage (or first charge). The security (property) can be a residence, a Buy to Let OR a commercial property. The lender has second (or third, etc.) charge on the property, in the event that the property needs to be repossessed in order to settle debts. Because of the relatively greater risk, secured loans usually carry a higher interest rate than mortgages.
Who is it for?
Secured loans are only available to property owners and can be used to consolidate existing loans, whether secured or unsecured, or to release capital. Typically, these loans are taken out in preference to re-mortgaging because it would be uneconomic to re-mortgage. This may be because the applicant has a first charge mortgage with a heavy redemption penalty or with a very low interest rate. Sometimes these loans are taken because the applicant’s credit history is impaired and refinancing the whole existing mortgage would cause the monthly payments to become excessive.
Who is it not for?
Secured loans are not available for people who are not property owners or who are without an income.
