There can be circumstances where you may need to borrow money to facilitate a significant purchase, for example home improvements, a wedding, or a car for example.
Or there may be circumstances where it might make sense to consolidate unsecured debts into one loan over a longer period to reduce monthly payments. In these circumstances a secured loan may be an option to consider.
A secured loan, like a mortgage is secured against the value of your home. If you already have a mortgage in place, the secured loan would become what’s known as a second charge, which means that it would be repaid if you sold your house, after the mortgage had first been repaid.
Like mortgages, secured loans are available on fixed or variable rates. Furthermore, the lender may also charge a ‘booking/arrangement fee’ to apply for these types of loans. You should ask your adviser to explain these in more detail or ask for an illustration.
Just like a mortgage a secured loan is secured against your home, it could be repossessed if you do not keep up the loan repayments.