Most of the time, everyday borrowers make a beeline for the kinds of unsecured loans that have become something of a standard. Often failing to consider if and to what extent secured loans could represent a superior alternative.
Which for the most part comes down to two things – a lack of awareness that secured loans in the UK are available, or knowledge gaps as to their value and purpose? Nevertheless, in the right place, at the right time and for the right borrower, a secured loan has the potential to be the very best financial solution available.
What Are Secured Loans?
As the name quite rightly suggests, a secured loan is effectively any type of loan that is provided on the condition that the borrower secures the loan value with some kind of collateral. Homes and other properties usually serving as security for such loans, though some lenders may accept a variety of other assets – land, vehicles, jewellery, personal possessions and so on.
The benefits of a secured loan being that qualification criteria is relatively relaxed and credit ratings/proof of income rarely come into the equation. Just as long as the required collateral can be put up by the borrower, gaining access to funding with no specific upper limit is relatively easy.
What Are Secured Loans Used For?
In theory, a secured loan can be used for absolutely any legitimate purpose whatsoever. Nevertheless, secured loans are perhaps most commonly used for the purposes of property improvements, renovations, extension and finance for development works in general.
In a typical scenario, the borrower may own one or more properties in desperate need of improvement. In order to carry out the necessary works to then sell-on or let the properties, a relatively large financial injection is required as quickly as possible. As they already own the properties in question, the borrower may be able to obtain a secured loan by using their properties as collateral.
Along with gaining access to the cash relatively quickly, secured loans typically carry relatively low rates of interest and can be uniquely flexible and in nature.
That said, secured loans are routinely used by businesses of all shapes and sizes to meet unexpected expenses, fund expansion or improvement efforts, help cover initial business establishment costs and so on. Just as long as you have the required collateral to cover the loan, you can borrow as much as you need and negotiate comparatively flexible and affordable terms.
What Are the Different Types of Secured Loans?
As with standard personal loans, secured loans are available in an endless variety of sizes and types. Homeowner loans enable borrowers to access considerably larger sums of money than would be available through unsecured loans, bridging loans are ideal for those in need of immediate short-term funding while secured business loans represent the perfect choice for those looking to cover initial, on-going or unexpected business expenses.
Once again, the key determining factor when it comes to qualification for and the value of the secured loan is the collateral you are able to provide. If you believe you have the necessary assets to secure the loan you require, secured loans represent an avenue that is definitely worth considering. Speak to an independent broker or financial adviser before going ahead, in order to gain a better understanding of the various options available to you.
This article was provided by Bridging Loans http://www.ukpropertyfinance.co.uk