The Benefits of a Secured Loan
Secured loans are secured against your own home, and as such, they are only available to homeowners. This may seem like a risky way of taking out a loan, but this is only the case if you believe you may at some point struggle to repay it. If this is something you are worried about, then a loan is not something you should be considering in the first place.
Compared to a personal loan, a secured loan offers many benefits and advantages; let’s dive in and unfold some before you make a loan decision.
The primary reason people choose to take out a secured loan is that providers are willing to offer a much larger sum of money when it is secured against a property. Generally, the maximum amount available for a personal loan is £25,000, but with a secured loan, it could be as much as £100,000.
This is ideal for people who are looking to do something significant with their money. Many will use the lump sum to consolidate any existing debt into one monthly payment, but others like to have something to show for their money. This is often in the form of home improvement, such as loft conversions, conservatories and extensions. The great thing about this is that it can be considered an investment; the value of your home will increase with any improvements made to it. In many cases, the increased value of the property will in fact outweigh the initial outlay.
If you do choose to take out a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
Longer Repayment Period
Another reason that secured loans are so popular is that they are often taken out over a long period of time, perhaps up to 20 years. This may seem like a lengthy period for which to have a loan, but it does considerably bring down the cost of monthly payments. With home improvements, you’ll feel the benefit for more than the whole life of the loan.
It is always important to properly consider any financial decisions before you make them, and taking out a secured loan is not different. As it is secured against your home, you must make absolutely sure the loan is right for you. Once you have done, then you should draw up a financial plan to determine exactly how much money you need, how long you’d need to pay it back over, and how much you can afford to pay monthly. It is beneficial to do this, or you may find that you’ve taken out too much or too little money. You must of course be able to afford the repayments.
Some of the best providers will make the planning process much easier by displaying examples of the APR they offer, along with calculators which allow you to find out what payments are depending on the loan amount and period. You should also look out for companies that will take care of any additional payment associated with the loan such as the property valuation, and who have a reputation for making the process easy, with good customer service. You can find out more about the process of taking out a secured loan here: http://www.nemo-loans.co.uk/nemo-loans/what-is-the-process.aspx.