Secured loan

Secured loan against your house usually involves higher interest rates and a shorter loan period than re-mortgaging.

The higher costs are due to greater risks for the lender – a secured loan is known as a ‘second charge’ because the mortgage is the ‘first charge’. That means the mortgage company has first rights to any money when a property is sold, re-mortgaged or repossessed.

If you already have a secured loan, some loan companies will lend a ‘third charge’, at an even higher interest rate.

What to look out for before applying for Secured Loan

You should always think carefully before securing existing loans against your home because it may be repossessed if you do not keep up repayments on your mortgage. With an unsecured loan, your home is at less risk.

Make sure monthly payments for a secured loan are affordable and avoid continuing to build up other loans – some organisations suggest cutting up your credit cards loans.

ClearStart maintains a panel of preferred mortgage brokers who specialise in secured loans and who can help when making a decision about re-mortgaging.

Further reading
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