Secured Loans – Explained
Similar to a mortgage, a secured loan will offer very competitive rates of interest, but are usually more expensive than a mortgage.
The interest rates offered are usually much less than a Credit Card, Personal Loan and Higher Purchase Loans offered by banks and other lending institutions. This is because the loan term is generally longer, and secured, just like a mortgage on your home. Amounts available are from £5,000 – £100,000 with terms between 5 – 30 years.
The loan is granted against the equity of your property i.e. if your property is valued at £100,000, you have a mortgage of £50,000; the equity available would be £50,000. For loan purposes this would mean that your debt on your current property has a” Loan to value” (LTV) of 50%.
For this scenario if a Secured Loan Lenders maximum LTV is 90%, an amount of £40,000 can be borrowed. The money raised can be used for Home Improvements, Debt Consolidation, New Car or any other legal purpose.