Secured loans
Secured loans are the most popular way for people to raise the extra
capital that they need, but there are also a few other ways of going
about this process. The most widely used alternatives are undoubtedly
unsecured loans and remortgaging, but why should every homeowner always
look into secured homeowner loans before even considering the other two
options mentioned? Read on to find out...
Let's look at unsecured loans first - loans that are taken out from a
lender whereby there is no security for the lender to fall back on. This
means that should the borrower default on the repayments, the lender is
not able to get their money back through the equity that someone has in
their home (unlike with secured loans). Now at first this might seem
like a good thing - after all, why risk your house when taking out a
loan? The reality is though that this extra risk forces the lenders to
push their interest rates up hugely, therefore meaning that an unsecured
loan is always more expensive than the relatively cheap secured loans.
Cheap secured loans are easy to find; cheap unsecured loans certainly
are not!
The other advantage of using secured homeowner loans over unsecured ones
is that for people with bad credit, secured loans are often the only
way to go. No lender will agree to lending money to someone with bad
credit unless they have some way of getting their money back if the
worst happens - something that they can do when the equity of the home
is placed as a bargaining chip in the deal. Unsecured loans are not
suitable for people with bad credit - even if various television adverts
say that they will provide them (usually for around 150%+ APR)!
Remortgaging a home is another way that people often look to get some
money, but again this is often not as preferable as getting secured
homeowner loans. There are two main reasons for this, with the first
being that remortgaging a home can often take a very long time - time
that some people don't have when they are trying to get their hands on
some extra money quickly. There are a number of fast secured loans out
there from reputable companies, therefore meaning that taking out
secured homeowner loans could be the best route to take.
The other reason for opting for a secured loan instead of remortgaging
is simply that of personal pride. If you have spent years and years
paying off a home, do you really want to then hand part of it back to
the bank and begin the process all over again? Taking out fast secured
loans will mean that you will still 100% own the equity in your home
(provided it has all been paid off, of course) and can therefore have
the satisfaction of knowing that you never have to worry about mortgages
again. The same goes for business properties - secured business loans
are often a far better option than remortgaging the building that your
business operates from.