Making Sense Of Money

Secured Loans

Secured Loans For Bad CreditThese secured loans for bad credit are loans that are specifically created for people with a bad or adverse credit history and are secured against property. Bad credit loans UK that are also known as homeowner loans or remortgages.

A secured loan is a loan which is backed up by assets belonging to the borrower, normally property or vehicle, in order to decrease the risk taken on by the lender. If you don’t maintain your repayments, the property used as security can be at risk of repossession.

Because of the decrease in risk to the lender such loans can often be much greater in value than unsecured loans (subject to equity value) and interest rates / APR more competitive.

So, it’s an additional option available only to those who own a property.


A secured loan comes with a guarantee to the lender that it will be repaid. Whilst an unsecured loan is based on the ability and trust of the borrower to repay a secured loan is granted against the value of some form of property or asset owned by the borrower which will be used as security against the the loan and allows the lender the ability to enforce the sale of this asset to recoup the amount of the outstanding loan in the event of default.

There are many forms of secured loans – logbook loans that are secured against a vehicle, pawnbroker type loans that can be secured against all kinds of property but the homeowner loan is perhaps the one that everyone thinks about.

Who Is Eligible?

Obviously, to be considered for a secured homeowner loan you’ll need to own a home and, not just that, there must be enough equity (the difference between market value of the property and amount still owed on the mortgage) to cover the amount borrowed. There will then be forms to fill in which will allow the lender to sell the property if repayments on the loan are not kept up.

On the positive side though, a secured loan significantly reduces the risk of lending and therefore the maximum loan size can be significantly higher (subject to equity and ability to repay) and interest rates much more competitive – and that applies to both good credit or bad credit history.

What Can It Be Used For?

This kind of loan can be used for any reason but is often preferred for bigger projects, for example, home improvements –  when borrowing against the equity in the property can result in an increased value, maybe by adding an extension or suchlike. It’s often used (and heavily advertised) for debt consolidation – taking all those high interest debts and wrapping them into a single, lower interest repayment. It can be used for any reason at all though – even raising money for business purposes.

As stated earlier, the maximum loan will be subject to equity and personal circumstances but often a bad credit secured loan can give access to sizable loans at very competitive interest rates.

Always shop around to get a secured loan with bad credit as competition between lenders for your business may result in decent interest rates and terms – the actual rates available will obviously depend on your particular circumstances.

Important – in respect of secured loans for bad credit:


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Posted by on 10:01 pm in credit cards with bad credit, debt consolidation | 0 comments

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