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Secured Loans - A Good Choice


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Thinking of taking a loan…well there are some pointers that you need to keep in mind before taking the final step. First, ask yourself…what do you want to do with the money? Be honest with yourself…don’t sugarcoat the reality…whether its consolidation of debts, or a holiday in the Caribbean or to get a Paris Hitonish nose…stick to your decision. Is there any possibility of a salary hike in the near future or your Aunt Sally leaving you a hefty sum that can stop you from making the rounds of the banks? Or better still, is it possible that you can do postpone your plan or maybe do without it? If your answer is a ‘no can do bro’ then a loan might just be your only way out.

Taking a loan is serious stuff. Don’t kid yourself into thinking it’s an easy way out. Remember whatever you take out, you will have to return with interest. Taking a loan that offers the best terms and conditions will be a good option. Typically, personal loans can be taken against an asset of some kind or by not pledging anything against the loaned amount. An asset based loan will be called secured loans. A loan that can be taken without pledging any security against it is termed unsecured loans.

Secured loans offer more benefits to the borrower. However, you have to be a homeowner in order to apply for this loan. Although, do take care, the lender has the right to repossess your home in case of missed payments or repeated defaults. You can borrow a considerable amount of money through this loan. The maximum limit is somewhere around £250,000. Generally, lenders go in for a property evaluation of your asset. Based on the available equity, they decide on the final principal amount. The maximum limit is about 90% of the home equity.

However, in some cases, the lender may also give secured loans against negative or insufficient equity to the tune of 125%. What happens in such cases is that either the property is located in an extremely posh area or the owners have made quite a lot of renovations and modifications that raise the value of the house in the real estate market. In fact, a recent figures released by a leading financial house shows that loft conversion tops the list of renovations. It can hike up the property value by about £22,000. Floor extensions and conservatories are also popular modifications that can earn you brownie points.

In today’s world where you can buy anything and everything online, is it possible to get the required cash also through the Internet. Well, the answer is a resounding yes!! Getting online secured loans is a reality now. All you have to do is browse the net and you will get loads of options. Click on the required product and fill up the online application form. Their verification officers will give a call back within a day to recheck your personal details and requirements. Most online lenders will offer you a choice of loan plans and it’s your prerogative to choose one of them or reject all of them.

Most of these sites provide a free search option where the money is not taken from the customer instead it is taken from the lenders. Borrowers can also use the loan calculator to check out how much they will need to pay at the end of each month. That way they have a fair idea abut the TRA or total repayment amount at the end of each loan statement. Online secured loans therefore have their own set of advantages.

Accelerated repayments without any penalty, repayment holidays, and deferred payments are some features that are provided by different lenders. Some of the other benefits associated with online secured loans include choice of interest plans. Typically, there are two different types of interest plans offered:

1. Fixed rate of interest

Here the customer pays a fixed interest rate for a particular period during the early years of the loan tenure as agreed in the documents.

2. flexible rate pf interest

Here the interest rate offered to the borrower may vary subject to the base rate as decided by the Bank of England. Generally, the interest rate offered to the customer is reviewed after every six months.

The repayment period for secured loans can stretch to 25 years. In some instances, it is known to go up to 30 years. However, the longer you stretch the loan tenure, the more interest you will end up paying against the loan amount. That is why, borrow only what is needed. Don’t go overboard just because you can get a huge loan amount.

Randhir Kumar is a business writer specializing in finance and credit products and has written authoritative articles about Secured Loans, Personal loans etc. He is currently assisting Shakespearefinance as a finance specialist.

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