Secured loans uk require the borrower to provide the lending company with security against the loan. With these loans it is the borrower's home, regardless of whether the property is owned outright or whether it is mortgaged. If the property is owned outright then the loan granted on it is known as first charges. If it carries an existing mortgage then the loan is called second charges. Secured loans can be used by the borrower for a wide variety of purposes, including debt consolidation. It makes a lot of sense to borrow money at a low interest rate to pay off debts on which you are paying a much higher interest rate. This could bring down your monthly repayment total as well as possibly reducing some of the pressure you may have been under from your existing creditors. Having just one creditor can also make things a little easier. If you are considering a debt consolidation loan then you will need to get a figure on exactly how much you owe. Remember to ask your creditors for settlement figures, not balances, as any early settlement fee or redemption penalty will have to be included in the total.
Interest rates are lower for secured loans uk than for unsecured loans and this is because the lending company has the added benefit of security which protects their investment should the borrower be unable to repay the loan. It is important that you make sure that your monthly budget can afford the repayments on secured loans before you commit to a debt secured on your home. A monthly income and expenditure will help you to get a clear picture of your financial situation. If you default on repayments and fail to pay back the loan you will eventually have your home repossessed in order to pay the debt. In the case of debt consolidation it is essential that you solve the root of your debt problem and are certain that you can cover the loan repayments.
Generally speaking, secured loans are easier to get approval on for the simple reason that you are putting your home on the line to back the loan. Unsecured loans, which require no pledge of security, represent a far greater risk to the lending company with the result that they are more difficult to get approved and carry higher interest rates. The borrower's credit history is also more critical in the case of unsecured loans. Secured loans can take longer to process but it is well worth the wait when you are saving money on a lower interest rate. Personal secured loans UK can make it possible for people who are self-employed, have moved home or changed jobs frequently or have adverse credit to get a loan.
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