How secured loans can prove beneficial

In the past many people were afraid to touch secured loans, with fears that this sort of loan would plunge them into negative equity or result in them losing their home. However, over recent years this type of finance has become increasingly popular, with a rising number of homeowner realising that this could actually be the most sensible and affordable way to borrow money.

The massive rise in equity levels for most homeowners over recent years has meant that homeowner across the UK now have increased financial leverage when it comes to taking out finance, and this is something that many homeowners have taken advantage of.

Basically, a secured loan allows the homeowner to unlock the cash that is tied up in the value of the home without having to sell up and move on first.

These secured loans offer a number of benefits that do not come with unsecured finance, and this is what sways so many homeowners to opt for this type of loan.

One of the main attractions of the secured loan is that the borrowing power is so much greater than with an unsecured loan. With unsecured loans the maximum you can borrow is usually £25,000, and this depends on your financial status, credit, income, and various other factors.

However, the amount that you can borrow with a secured loan is way higher, but does depend on a variety of factors including your equity levels.

If you want to work out your equity levels in order to look into taking out a secured loan the first thing to do is get your property valued.

If you are using an estate agent to get a value on your home make sure that you contact around two or three local estate agents so that you get a better idea of the true value of the property – if you only contact one there is a danger that the estate agent will either undervalue the home thinking it will lead to a quicker sale or overvalue it to increase the commission that the estate agency gets should you sell it.

You will also need to contact your mortgage lender in order to get an accurate balance on your mortgage, as well as contacting any lenders that you have secured loans with already if applicable.
All you will need to do once you have all of this information is deduct the amounts that you owe on your home from the amount that the property is worth, and you will be left with the equity. You can then use this to make enquiries with lenders, and to help determine how much you may be eligible to borrow.

Another of the attractions of secured loans is that they offer far longer repayment periods than unsecured loans, and this can help borrowers to keep down their outgoings. You will be able to spread your loan over a longer term, and this means that you can reduce the amount you have to pay out each month.

If you have bad credit then the likelihood of getting an unsecured is slim to none, but if you are also a homeowner then there is a far better chance that you will be able to get finance in the form of a secured loan.

With secured loans the amount that you will be able to borrow will partly depend on your equity levels, but the lending practices of each individual lender can vary. You may find that some lenders will only allow you to borrow up to a certain percentage of your equity, and this is a good safeguard against falling into negative equity as you will not have financed your home to the hilt.

Some lenders will allow you to borrow up to the full amount of your equity, and there are also lenders that will allow you to borrow more than your equity. You will need to compare loans and lenders in order to determine which loan is best suited to you.

You will find some very competitive rates available on secured loans, but you do need to do your research first, as this will enable you to pick up on the best deals by comparing different secured loans from different lenders.

You can compare with ease and convenience simply by going online, where you will find a vast array of lenders offering secured loans for homeowners.

Alternatively you can use a broker service, where the broker can use established links with a wide range of lenders to determine which lender and loan is going to best suit your needs.

You can use secured loans for all sorts of purposes, and one of the popular uses for these loans is to carry out home improvements such as extensions, conversions, and more.

This can actually further increase the value of your home and could enable you to recoup some or all of the value of the loan through increasing the value of your home by that amount.

source : http://www.thriftyscot.co.uk/