Summary

This article gives a full overview of what is involved in taking out a secured or an unsecured loan.

Loans. The differences between secured and unsecured loans

It's important to be aware of the differences between secured

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and unsecured loans before you make a decision on taking out a loan. As this article will explain, if you don't own your home or are in the process of paying off a mortgage, you won't have the choice. But a homeowner does have a choice, and it's very important that you make the right decision.

In this article we will give you the full rundown about each type of loan.

A loan 'secured ' on your house The whole point of a secured loan is that your home provides the security which enables the lender to take you on as a customer. The system of ( car insurance quotes ) getting a secured loan really does depend on owning or part-owning a property, as the lender goes through the Land Registry to place a legal right on your home if you default on the loan. They take second place to the mortgage which has the priority, so if the home has to be repossessed and sold, they would get their monies once the mortgage had been paid off. If there is any left over after the sale, then you would get that amount.

You must take getting a secured loan very seriously because if you do find ( insurance ) that your circumstances change and you can't make repayments, it is possible that the lender will end up taking your home away from you. They are perfectly entitled to do this. So, we definitely recommend thinking hard and ensuring that you will be able to ( term assurance ) meet the repayments for the term of the agreement. There are also a number of insurance options out there to protect you from the possibility of defaulting on your loan.

Getting an unsecured loan

Unsecured loans are for the people that don't own a home. Because you are not able to secure a loan on property, you will not be able to borrow as much, simply because the lender does not have any security that will ensure that they do get their money back.

If you only want to borrow up to £15,000, you should be able to get an unsecured loan. If you have an excellent credit history, you may be able to borrow as much as £25,000. ( mortgage quotes ) The least you will be able to borrow is £500. Because the lender does not have any security on the loan, the interest rate will be slightly higher than with a secured loan. The difference could actually be as much as 1% - 3% more than a secured loan deal. If you have a poor credit record, the difference could be even more, and they may decline your application.

If you want to borrow a large amount, up to £75,000 for example, then you will need to be able to get a secured loan. You can also borrow amounts as low as £5,000. The sky really is the limit on secured loans especially if you have a high value house that you own outright. That's because they know that if you do default on the repayments, they would definitely get their money back on the sale of your house. Just like with a mortgage, you can pay a large secured loan back over 25 years. Of course, you can pay it back quicker, if you prefer.

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Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it.
Loans may be secured on your home or other property. Think carefully before securing other debts against your home.