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Types of secured loans

A secured loan uses your property as security. This guarantee includes associated property assets such as your house Title Deeds, your life policies, etc.

Secured loans are often defined by their purpose.

Debt consolidation secured loans

This type of loan allows you to put various loans or outstanding debts into a single loa. It normally carries a lower interest rate than your current outstanding loans/credit plans.

A secured loan used for debt consolidation typically replaces unsecured loans and credit cards which carry high interest rates. Given that a secured loan can offer a lower interest rate than many unsecured loans, it offers an attractive way to address debt consolidation.

Homeowner loans

When you buy a house, you typically need a larger amount of money than you do when you agree to a homeowner or secured loan. Lenders will not loan such large amounts without some sort of security because of the associated risk.

So, when you take out a homeowner loan or secured loan, the lender works out a charge to offset against your property and can let you borrow larger amounts of money.

Secured business loans

Whilst we don't offer this type of loan, you might like to know that this is a secured loan where you use the funds for your business. It can be secured against your business and property.

Tips for taking out a secured loan

Make sure you check these points before you agree to a secured loan:

• Credibility check Check that the secured loans company you're interested in approaching is a member of a national professional organisation such as FISA. This association was set up in 1988 to improve industry standards in the secured loan and second mortgage sector.
• Check what happens if you make an early repayment Ask if there are any penalties if you want to repay the loan early. On this point, it's worth checking how much interest you will be expected to pay with your final payment and if there are any other charges due at this final stage.
• Check what happens if you make late payments Most secured loan companies will ask you to make your monthly payments by direct debit from your bank account. Find out from your lender how much the costs are in case you're late with your payments.

Secured loans and debt information See further information at:

• Consumerdirect's Borrowing money website
• Directgov's Plan your way out of debt website.