Loans can be different types; one option is to consider a secured or an unsecured one.

Secured loans are available to homeowners with the property being used as security. It is a very common type of debt used by many individuals to purchase housing. In cases like this, the lender is given security – a lien on the title to the house – until the mortgage is paid off in full. In case the borrower defaults on the loan, the lender would have the legal right to repossess the house and sell it, to recover sums owing to it.

Secured loans are not just used for housing. In some cases, the loan is taken out to purchase a new or used car, the duration of the loan period being considerably shorter often corresponding to the useful life of the car.

There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer, where an indirect auto loan means that the car dealership acts as an intermediary between the bank or financial institution and the consumer.

Normally a secured loan is applied for through a secured loan broker known as a packager, who will help you select the secured loan and secured loan provider most suitable for your needs and then guide you through the entire process. The process will begin with a valuation of your home confirming the current market value of your home.

Once the value of the home has been confirmed your existing lenders will be asked to confirm the current levels of lending secured on the property. The packager will use this information to confirm the maximum amount you can borrow. In case the sum is convenient for you and completed the paperwork your secured loan will be granted and wired to your account.

At the most difficult of one’s times, the burden of having to take a loan becomes hefty. With all due respect to your emotions, rushing into it could be devastating. And when it comes to secured loans, the consequences of making the wrong choice are even worse.

So take a deep breath and let us help you out in choosing the right secured loan for you.


First things first! Before going any further, understanding the basics of secured loan is important.

This type of loan works like a mortgage. The borrower offers their asset that in the majority of the instances is their home as collateral in exchange of the money they receive. Home because this wins the trust of the bank making the arrangement. In case a default takes place, the bank can sell the house to compensate for its money.

As a borrower, your monthly payments should not miss out. For that make sure that you are not stretching yourself too thin. A sustainable means of income could ensure that your house is secured. In order to avoid troubles think it through with your lender, the policies of responsible lending.  Sometimes the lenders deny the request claiming that the means of repayment is not reliable.


Make a list of all the options for the lenders that you are willing to consider. Family members, far off relatives or close friends who are tradespeople may seem a convenient option to count on. But think this through; it is a bargain that needs no emotions to mess things up.

Although family might stretch time and make things a bit more flexible for you if there’s an equally good option outside of it then go for the latter. It will save you from the unnecessary emotional turmoil in case of default.


There are different types of secured loans and each depends on the type of the circumstances that you are faced with.

Here is a list:


This allows you to pay a fixed amount of money each month.

PERKS: This gives you enough room to budget your monthly expenses without having to calculate the amount each month. It will save you from the mental exhaustion.


This one is a trickier so pay attention. Here, you are supposed to pay a predetermined amount each month over the fixed rate short-term period which could be as short as twelve months and might extend up to five years. Afterwards, your repayments change to the lender’s normal variable rate.

CAREFUL: This implies that your payment amount fluctuates. It has an equal probability of an increase and decreases.


The interest on these types of loans hold significance in the sense that they can alter as the market changes (the change may take place as the base rate set by the Bank of England changes)

This would lead to your monthly payments; the amount you pay back over the loan period to fluctuate. In case the interest rates increase, there arises the probability of you having to repay considerably more than you expected. 

CAREFUL: Under extreme conditions, you may end up defaulting on your repayments.


If you fail to repay, the consequences could be profound. It could damage your credit rating instantly, and letters from lenders informing you of overdue payments are frequently billed to you with interest, as a penalty. Fortunately, the majority of the legitimate lenders make less money from repossessing properties instead of having the debts repaid. If there is even a slight chance for you to be unable to pay, or fall behind with your payments, tell the lender right away. This provides you a negotiating ground with the lender who might consider revising the repayment schedule.

However it would be noteworthy to understand the criteria and qualification as in certain cases, there are prerequisites like age and other credentials.


Sometimes, the borrowers are able to repay earlier than their schedule which may work against them. Yes, you read that right! With certain lenders, the borrowers that are able to repay the loan early get penalized to compensate for the loss of the interest of the former. So make sure that you either refrain from choosing the ones that penalize on early payments or do not make early repayments at all.


Choosing the type of secured loan you need is crucial. Take your time and evaluate your options and resources rationally instead of rushing into it. Also check out

Good luck!