| Secured loans have become very popular over | | | | - The repayment periods on offer them are far |
| recent years, particularly in light of rising equity | | | | longer than with unsecured loans, with some |
| levels stemming from rocketing house prices in | | | | lenders offering up to thirty years by way of a |
| the UK. This increase in equity has enabled many | | | | repayment term. This can help to keep monthly |
| homeowners to enjoy the financial leverage of | | | | repayments down by spreading the loan over a |
| being able to borrow against their home, and | | | | longer period. |
| homeowners have taken advantage of this ability | | | | - You can get some very good rates on secured |
| to get the finance they want for anything from | | | | loans, with a choice of lenders offering |
| consolidation of debts or home improvements to | | | | competitive deals. However, your rate of interest |
| purchasing a car or paying for a dream wedding. | | | | will depend on your credit rating and other factors. |
| However, it is important to remember that there | | | | You should compare the different ones available |
| are pros and cons to taking out a secured loan, | | | | before you make a decision. One way of doing |
| and in order to make an informed decision with | | | | this can be via a broker. |
| regards to whether it is the right option for you it | | | | The cons |
| is important that you weigh up the pros and cons | | | | - Secured loans are secured against the home, |
| to determine whether a secured loan will suit your | | | | and this means that if you default on repayments |
| needs and circumstances. | | | | and fall into arrears you could risk losing your |
| The pros | | | | home. You therefore must ensure that you can |
| - Secured loans offer greater borrowing power | | | | afford the repayments on your loan. |
| than unsecured loans. However, the amount that | | | | - If house prices fall sharply after you have taken |
| you can borrow will depend upon a number of | | | | out one you could find that you fall into negative |
| factors such as your equity levels, your financial | | | | equity where you owe more on your home than |
| and employment status, and your credit history. | | | | the property is actually worth. |
| - Secured loans are often available to people with | | | | - Secured loans are available over a long term, |
| bad credit who cannot get any form of | | | | and although this can keep repayments down it |
| unsecured finance due to the extent of the | | | | can also leave you in debt for a long time. If you |
| damage to their credit. However, higher interest | | | | then want to repay the debt early, or even |
| rates are usually charged than they would be on a | | | | refinance, you could find that you face hefty |
| loan to someone with good credit. | | | | financial penalties. |