A secured loan is a loan that you borrow against an asset that you own, generally your home. It is a great financing tool if you want to borrow a large sum of money for a long period. If you have a bad credit score, you will have a chance to improve it as the repayment period is generally longer. You may get lower interest rates as the loan will be secured on your asset.
How Does a Secured Loan Work?
You apply for a secured loan by filling an application form that has all the detail such as loan amount, duration and other necessary information. The lender will assess your loan application along with your credit report. If your loan application is accepted by the lender and if you agree to all the Terms & Conditions proposed by them, then you can expect the funds to be transferred within 1-2 days. The only difference in the way of working of these loans is the – collateral.
How quickly can I get a Secured Loan?
The process of applying for a loan has become quicker and easier than ever before. You will have to fill an application form and submit it online. It will take only a few minutes for the lenders to assess your profile and give their decisions. A few lenders claim that they will disburse the funds to your bank accounts on the very same day. However, the actual time it may take for the funds to reach your account also depends on your bank.
How much can you Borrow against your House?
To borrow a secured loan against your home, it needs to have available equity. Generally, lenders offer you to borrow from £3,000 to £10,000 or more. However, the actual amount that you can borrow depends on several factors:
- Your income
- Credit score
- Any existing commitment to credit
- Amount of equity available
- Loan duration
- Loan amount
Different lenders have different lending criteria. Therefore, it cannot be said clearly how much amount you can borrow against your house. A proper evaluation is needed to know the loan amount you can borrow.
How many Secured Loans can you have on 1 Property?
You can get multiple secured loans on your property. However, it entirely depends on the amount of equity you have in your home. Another major factor that helps is securing multiple loans on your property is your income.
If you already have a loan on your property, and you are considering to take a new one, then the new lender will assess your profile to determine the chances. Post which, each existing lender will have to give their permission for a new loan that you are about to take on the same property. Remember that the interest rates for each subsequent loan will be getting higher than the last one.
As the loan is secured on your property, there is a risk that you may lose it. The lender may repossess your property and sale it to recover the money they owe to you. Therefore, keep up with all the repayments to avoid losing your asset. If you are not sure of the repayments, consider alternatives to secured loans. Talk to an expert if you find difficulty in assessing your financial conditions.