Secured loans can be used to fund planned purchases or cover urgent expenses when time is a factor. But before applying for a secured loan, it’s worth getting to know the different types of secured loans and their primary applications.
What Are Secured Loans?
The term ‘secured loan’ refers to any type of lending products that’s secured on the borrower’s existing assets. Applicants are the able to borrow money in accordance with the value of the assets they provide as collateral, usually their home or a business property. In a working example, a lender may be willing to offer a secured loan worth 75% of the total value of the collateral provided. If the applicant’s home was valued at £200,000, they could apply for a secured loan of up to £150,000.
Secured loans are considered lower-risk loans by most banks and lenders, resulting in competitive rates of interest and comparatively low borrowing costs. However, the borrower’s property may be at risk if the loan is not repaid in accordance with the agreed terms.
The Different Types of Secured Loans
Secured loans are available for domestic and business applications as an alternative to traditional personal loans. Some of the most common types of secured loans issued in the UK include:
• Personal Secured Loans. Offered to the general
public upon the provision of collateral.
• Secured Business Loans. Available in considerably higher sums for business purposes.
• Mortgages. Commercial and domestic loans secured on the property itself.
• Bridging Loans. Ideal for covering urgent expenses and major purchases.
• Auction Finance. Provided exclusively for purchasing property at auction/
• Development Finance. Specialist loans for property development projects.
• Car Loans. Commercial and domestic loans are secured on the vehicle purchased.
• Debt Consolidation Loans. May be secured using a variety of assets.
Each type of secured loan has its own unique advantages and disadvantages. Prior to submitting an application, it’s important to speak to an independent broker for objective advice on the available options.
Call today to discuss the ideal secured loan for your requirements and budget.
Comparing the Best Deals from UK Banks and Lenders
Secured loans aren’t easy to access via the usual High Street lenders. For the best deal on any of the secured loan types detailed above, it pays to look beyond the High Street.
Comparing the market means taking into account all major banks and independent lenders across the UK. Those who specialise primarily in secured loans often provide access to the best deals and the lowest borrowing costs.
Here at Secured-Loans.co.uk, we offer a whole-of-market comparison service for business and private borrowers alike. Contact our customer support team with details of your request and we’ll scour the market to find the best deal from our network of specialist lenders.
What Can Be Used as Collateral?
Many lenders are only willing to accept property as collateral. Examples of which include the applicant’s home, business premises, commercial properties, industrial buildings and so on. It may also be possible to offer land as security for a loan.
Depending on the size or nature of the loan, you may have the option of providing other assets (or a combination thereof) as collateral. A secured loan specialist may be willing to accept vehicles, office equipment, general business assets, jewellery, watches, fine art and other personal property.
In all instances, it’s usually necessary to organise an official valuation of the property or assets you intend to provide as collateral.
Secured Loans Vs Unsecured Loans
By providing collateral to cover the cost of the loan, you stand to access significantly lower interest rates and more competitive borrowing costs. In addition, a secured loan can be much quicker and easier to apply for and obtain than an unsecured loan.
Credit checks and proof of income may also be unnecessary when applying for a secured loan. If you’re able to provide sufficient collateral, the lender may not be interested in your credit history and current financial status. For poor credit applicants, secured loans can offer an important lifeline.
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Financial Conduct Authority (FCA)
UK Property Finance is directly authorised and regulated by the Financial Conduct Authority (FCA), FRN 667602. Our scope of permission is described as credit broking which means that we can provide advice and make recommendations on UK mortgage and general insurance products.