Homeowners often need a loan of some kind for a number of reasons, and most know the expression secured loans and they know people who have taken out one such a loan, one of which was used to purchase a boat, and yet another secured loan was taken out by a friend to pay for a luxury holiday. In spite of knowing individuals who have taken out a secured loan many are unsure of exactly what a secured loan is..

The first thing about secured loans is that they are only available to homeowners and those who rent their property cannot apply.This fact is made clear by their very name

The asset required as security is the equity that there is in a property, and there are now no secured loans at 100% or 125% loan to value. These loan to values disappeared with the recession.

As loan to values are now restricted the slackest LTV for employed borrower is restricted to 85%, and self employed are restricted to 75%.

One lender is advancing secured loans to the self employed without accounts at a LTV limited to 60%, and the borrower must produce three months bank statements.

The best interest rate for secured loans is currently about 9% which being much cheaper than that of credit cards makes them useful for debt consolidation lumping all debt into the one payment and saving money every month.

Secured loans can be paid back over a twenty five years repayment term us a factor that makes them affordable ways of paying for a large purchase.

However they can be repaid early, and generally the penalty for early settlement is only one months interest

A remortgage can also be used for the same reasons as secured loans.

There is a time when a secured loan is better than a remortgage and this is when there is a tie in with the current mortgage, and the homeowner would be penalised if he settled the mortgage early.

The penalty can run to a huge sum with the penalty normally costing as much as 5% of the balance left in the mortgage, and paying this would defeat the reason for remortgaing.

Want to find out more about secured loans, then visit Champion Finance’s site on how to choose the best debt advice for your needs.