If you're a homeowner, a secured loan could be your best option of obtaining finance.
Secured loans are essentially backed by your assets - usually your home. This type of loan typically appeals to people who want to borrow a large sum with a longer repayment period. As a result, many people may opt for secured loans when seeking out a debt consolidation loan.
Find out more about secured loans from Legal Advice Helpline
Benefits and drawbacks of secured loans
Secured loans - sometimes referred to as homeowner loans - come with a range of advantages and drawbacks. The main benefits of a secured loan are:
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They often present a lower risk to lenders;
- So a secured loan could be easier to obtain if you have a poor credit rating;
- Borrowers can usually take out a larger amount on a secured loan;
- Repayments can often be made over a longer period of time;
- Making it easier to plan your finances over the long term.
However, it's also important to bear in mind the disadvantages of secured loans...
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If your loan is secured against your home
- You risk repossession if you fail to make the repayments on a secured loan;
- You will pay much more interest on a secured loan if the repayments are spread over a long period
Get further information on secured loans from Legal Advice Helpline
If you're considering taking out a secured loan as a means of debt consolidation but you're unsure of your options, the FSA's Money Made Clear website can point you in the right direction – click here to find out more.
You can also find out more about unsecured loans and remortgaging as an alternative to secured loans.