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Secured Loans

The Advantages of U.K. Secured Loans

Secured loans, generally speaking, are ones where the creditor gives a loan against collateral of property owned by the debtor. This means that in the event you are unable to pay back your loan, the bank will take the property which has been given as collateral in order to satisfy the terms of the loan.

While secured loans do have the downside of the risk of losing your property as a result of failure to retire the debt, they often involve much better terms than an unsecured loan. Since the creditor is taking less risk due to the value of the asset used as collateral, they can offer you more competitive interest rates and more flexible terms.

If you have real property and need to take a loan, maybe for a mortgage or other purpose, it is probably best to take advantage of a secured loan. If you are seeking a secured loan in the U.K. and have real property which you own outright, you can take part in a first charge secured loan. If you are using mortgaged property as your asset, then it is considered a second charge loan.

Most creditors will offer up to 125% of the value of the asset being used for collateral. This allows you to use the ownership of property as a means of capital investment or emergency finance while still using it, so long as you maintain the payments. This can also be helpful to people with credit problems who are seeking financing.

The terms of U.K. secured loans are going to vary greatly based on the parties involved. Generally speaking, they will be much better than an unsecured loan. If you feel comfortable in your ability to retire a debt and have some property you want to offer for collateral, a secured loan is probably the way to go. This will ensure great rates.

While the risk of loss of property might be frightening to a debtor, it is much easier than a judgment against the debtor's credit and name for failure to pay. It is important to measure the risk by assessing if there are likely situations which might cause you to not perform on your payments, and, if there are, how much of a hardship losing the property might be. The calculus must be your own, but there are many situations where a secured loan is a great deal.