Asset-based loans allow you a big loan amount. The lender gets an asset as collateral. The asset is usually your home that has a big value in the market. The market value of your home as reduced by the amount of debts you have already taken against the home is called equity.
The equity in your home determines the amount of loan that you can get by pledging your home. Secured loans or asset-based loans are ideal when you need a big loan amount. The equity in your home helps you in getting a huge loan amount up to £250,000. But, there is some risk involved in these loans.
By pledging your home, you agree to guarantee the repayment of loan. And, if you fail to do so, your home can be repossessed and sold to recover the outstanding loan. So, if you are planning to take secured loans, you should also concentrate on repaying the loan amount in accordance with the agreed schedule of repayment.
Secured Loans are the least expensive loans. These loans involve a very low rate of interest as the risk to the lender is substantially reduced because of collateral. You can use these loans for many purposes. You can make heavy investments in your business or you can choose to buy an expensive sports car.
Some loan agreements contain stipulations like arrangement fees and early repayment penalties. Before signing the loan agreement you should make it sure that you have properly understood the implications of these conditions.
Source:articlesbase.com/loans-articles/
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