Let’s start with the basics - what is a secured loan?
Secured loans are a popular financial product that can be used for a variety of things - like improving your property, buying a car, or consolidating debt. Also known as homeowner loans, secured homeowner loans, or second-charge mortgages, they allow you to borrow money while using your home as ‘security’ (or ‘collateral’). This means the lender can take possession of your property if you aren’t keeping up with repayments, as a way of getting their money back.
Myth 1: Secured loans are only for people with bad credit scores
Whilst it’s true that people who don’t have a good credit history but do have value built up in their homes can apply, secured homeowner loans are accessible to a range of borrowers. Financially savvy homeowners are often keen to make the most of the lower interest rates secured loans offer (as opposed to most forms of unsecured personal credit, like credit cards). They know that by using their homes as collateral, they are more likely to be rewarded with access to rates that only homeowners get.
Myth 2: Taking out a secured loan is risky
Not all secured loans are made equal, though of course, securing any amount of money against your home should be taken seriously. It's crucial to understand the terms of your loan, and who you’re borrowing from. Brokers can be a good place to start, as their advice will be impartial. It’s also important to make sure your lender is FCA regulated and compliant like Selina.
Myth 3: Getting a secured loan approved is a long process
The process of getting a secured loan can actually be much more straightforward than most people think. Because you’re putting your home up as a guarantee, the lender will see you as less of a risk, whilst responsible lenders like Selina will have a well-practiced checklist they’ll run you through. Our process has been proven to actually take up to 66% less time than the industry average, though we recommend that you stay wary of any lenders promising instant decisions.
Here’s a quick look at Selina’s process, to give you an idea of what’s involved:
- Get a personalised quote via our website in under five minutes. There’s no commitment to move forward, and indicative quotes won’t impact your credit score at all.
- Speak to an advisor. We will lay out the terms of a potential loan and the process, before recommending the right product for your needs.
- If you decide to go ahead, leave us to do the rest! The agreed funds could be available in your account in as little as 48 hours.
Myth 4: Only banks offer secured loans
Secured homeowner loans are available from a variety of financial institutions, not just traditional or high-street banks. Credit unions, online lenders, and finance companies also offer secured loans. Shopping around can help you find the best terms and interest rates, as different lenders will have different offerings.
Myth 5: Expect hidden fees and charges
Like any financial product, secured loans can come with fees, but these are typically disclosed upfront. It’s important to read the loan agreement carefully and ask the lender about any potential fees. Transparency is required by law, so reputable lenders like Selina are obliged to provide clear information about all costs linked to the loan.
Used responsibly, a homeowner loan can provide you with valuable advantages. However, as it is a mortgage, you should consider the possible impact on your ability to secure additional borrowing against your home.
To learn more about how Selina can help improve your personal finances, visit our site. For more information on our claims, please visit our Marketing Claims page.
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