What are secured loans?
In simple terms, secured loans are secured against property. Secured loans are therefore only available to homeowners. Unsecured loans do not have any kind of security involved.
A secured loan is a loan in which the borrower pledges some asset (e.g. a house or a property) as collateral. The loan is then secured against the collateral. If the borrower defaults on agreed payment terms, the lender may eventually take possession of the asset used as collateral and may sell it to recoup the amount of the loan lent to the borrower. Therefore, you must think carefully about securing a loan against your property or any other asset you do not want to lose if you cannot keep up repayments.
In the UK, secured loans are a very popular form of finance where homeowners can use the equity tied up in their home to release a second charge in the form of a loan (usually on top of an existing mortgage).
