May 17th, 2007

A secured loan is a loan that requires the borrower to provide the lender with some form of security, such as a home or car that is of equal or more value than the loan.  With a secured homeowner loan the security will most likely be the borrower’s property.  If the property is already mortgaged then it is known as second charges, and where a property is owned outright it is known as first charges.  Generally, a secured loan is easier to obtain because the lender has the added benefit of security, which is a form of protection in cast a customer is unable to meet the repayments on the loan.

A secured homeowner loan is available in varying amounts and is available for different purposes.  The amount of the loan will usually range from £3,000 to £50,000 or more; it all depends on the lender.  The amount that is borrowed is then repaid monthly over an agreed length of time that usually ranges between three to twenty five years.  If, however, you repay the loan before the agreed time, you could be charged a redemption penalty, so if you know that you will repay the loan before the agreed time, then you may want to ensure a prepayment penalty is not included in your loan documents.

Another type of homeowner loan is the Bad Credit Secured Homeowner Loan.  This is usually for those people with a history of County Court Judgments (CCJs) for previously defaulted credit or for those who have previously filed for bankruptcy or taken out an IVA.  However, customers with a poor credit history due to missed or late payments may also find themselves obliged to take out an Adverse Credit Loan, so it is wise to check your credit record before borrowing.

The amount that you borrow and the annual percentage rate will depend upon the equity you have in your property.  Lenders will also look at your ability to repay with the information from your credit report and your application form.  Usually the APR quoted on a loan is the typical rates that will help the lender determine the exact rate to offer each individual.

Source : http://www.1stopfinanceshopuk.biz/blog/2007/05/17/secured-homeowner-loans/