Secured Debt Consolidation loans Explained
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Secured Loans
What is a secured loan?
A secured loan is a loan where you ask your lender to provide you with money at an appropriate interest with an agreed term. In order to get an approved interest rate, the lender will take security over an asset. The most common asset that is used to secure loans is somebody's property, their home.
What is an example of a secured loan?
A secured loan would be for an amount, for example £20,000 over a period of 20 years and secured against somebody's home. This is often where they have an existing mortgage, of £100,000 for example, where the property is valued at £200,000. This is viewed as security for lenders, should you fail to make payments. Many lenders will advance that type of money at a competitive interest rate for that individual.
How do I get a secured loan?
Many banks and building societies provide secured loans. However most of the companies that operate in this area, operate through an independent broker market. The best way into that market is actually through the internet and looking for secured loans by surfing the web. You'll then find a range of companies that provide this type of facility who will provide that type of loan.
What are the benefits of a secured loan?
A secured loan will give you a lower interest rate usually and also the ability to borrow a higher amount than with an unsecured loan. The benefit to the customer is that they will have to pay less per month in order to repay that loan over a period of time, because it's both over a longer term and the interest rate is lower.
What are the drawbacks of a secured loan?
The time it takes to complete a secured loan can be a major drawback for some people. However, in comparison to a mortgage it takes less time. This is because the consideration period on a secured loan is longer than those of unsecured loans. You may have to take legal advice, meaning additional fees and costs, which you wouldn't pay on an unsecured loan.
What are the risks of a secured loan?
If you fail to meet your repayments on a secured loan, then you may end up with an adverse credit history. If you fail to repay the loan in total, you could lose your property, or you may have county court judgments registered against you. Also, the risk of losing your home is a significant one, and one that should not be entered into lightly. Other risks are that you need to be careful in terms of shopping around to find the right lender. There are a number of people out there who apply different interest rates to higher risk customers in order to secure your business.
Do I need to own my own home to get a secured loan?
Secured loans can only be provided to people who own their own home. However, the main feature of a secured loan is that it sits on top of an existing mortgage. People who have got existing mortgages 'top-up' their borrowing by taking a secured loan.
What is a 'consideration period'?
A consideration period is a period of time that the lender must give you to look at the documentation in relation to the loan. During that period, they should not make contact with you because if they do they will invalidate the loan documentation. The 'cooling off' period gives you time to consider what you are entering into, in order to make sure you're happy with the amount of money you're about to borrow and that you can meet the payments that are required.
Don't Worry About Your Debts...
"A secured debt consolidation loan plan can be life changing. It can give you the chance to get your life back on track and to stop worrying about your creditors chasing you for payment."
"Our debt advisors have dealt with all sorts of situations so please don't be worried about talking to them about your debts."
Do I Qualify for a consoldiation loan?
Not everyone will qualify for a debt management program but a good place to start is by answering the following quick questions.
- Are you a UK resident?
- Do you have two or more debts amounting to at least £500?
- Have you checked the criteria to make sure that you don't qualify for debt management rather than a secured debt consolidation loan?
- Do you want to speak to an advisor who can help you consolidate your debts into one easy loan payment?
Fill in the simple form opposite, a friendly and experienced advisor will contact you at a time to suit you and discuss a solution to your debt problem.
Don't think you qualify?
- Are you a UK resident with debts but not a homeowner? Click here.
- Are you a UK homeowner owing more than 2 creditors, struggling to pay your debts each month? You may benefit from debt management instead of a debt consolidation loan. Click here.
If you couldn't answer YES to the questions, then all is not lost. Simply click on the link that best describes your residential status and we'll show you another solution.