Secured Loans – Top Facts

Secured loans can be a great way to find financial peace of mind - whether you need money for home renovations, business investment, other properties or to tackle debt problems - there isn't a better way to get money fast. But secured loans are serious financial responsibilities, and should not be taken out lightly. To be ready to take out a secured loan, you should know everything about them - what they are, how they work and what affect they will have on your life.

Secured loans are essentially second mortgages, on top of your existing deal. If you have a mortgage you probably have equity in your home - the certain percentage you own outright: it is that percentage that funds a secured loan. So secured loans are not new money, it's your own money.

Lenders use your home as equity in the same way a first charge mortgage lender does, so secured loans have the same limitations and consequences as a primary mortgage has - missed payments means red marks on your credit score and leaves your home in jeopardy.

Secured loans can be lent to any homeowner with equity - even if you only own 10% of your home, you could be able to borrow some of that amount. The more equity you have, the bigger loan you could be in line for. Even if you have had credit problems in the past, there are sub prime homeloans out there - the UK secured loans market is huge, so there are options for everyone.

And you can spend your loan on anything you may desire because it's your money. Secured loans are a great vehicle for debt consolidation, allowing you to take all those outgoings and turn them into one, manageable monthly payment. They can also be used to fund investments for new business ventures or even further property investments - entering into the buy to let market can be a goldmine, and a secured loan could be the key to those future profits.

You can even make money with secured loans - investing a loan back into your property and renovating, decorating or extending can add a lot onto your property's value - meaning your home's equity can work for you.

However you spend secured loans, they have to be dealt with like any other debt. Have a plan ready so as you know how you are going to meet the repayments each month and be ready for any eventuality. Talk to an adviser, who will be able to use their expert eye to see where you can maximise your finances. Secured loans will only work for borrowers who are sensible - they are not a quick-fix, get-out-of-jail-free card. So if you are thinking of a loan, make sure it's the right decision. Have a plan for repayment, a spending plan and a saving plan - because you only have so much equity in your home, don't let it go to waste.