Secured loans require the borrower to put up an asset as collateral against which the loan amount is issued. The popularity of this loan type is increasing in the UK. However, there is a flipside to this. There have been an astonishing number of repossessions in the country, due to non-repayment of the loans.
This loan is also loosely called a homeowner loan, as most of the assets that are put up as collateral happen to be homes. The advantages with taking a homeowner loan are several. The amount one can borrow with this loan is big – the typical figure is £75,000. Even this is a flexible amount though. With a collateral of greater value, one can always seek (and get) a bigger amount. Also, there is the added advantage of a long repayment term, which, at times, is as long as thirty years. Secured loans are ideal for circumstances that necessitate a big amount of money. The longer repayment term helps the borrower to manage finances better.
There are disadvantages with a homeowner loan too. The most glaring one is the threat of repossession of property, in the event of a repayment default from the borrower’s side. Secondly, availing a secured loan means one has to possibly go through endless paperwork. The expediency factor is not there with this loan.
There are several avenues through which one can get a homeowner loan. Some of the standard sources are banks; building institutions; private lenders, and the Internet. Of these, the first two have been long established in the market and have managed to gain the trust of the customers. Private lenders are a more recent addition that has come about owing to specialised customer needs. However, for sheer customer comfort and convenience, there is nothing as feasible as the Internet.
Borrowers taking secured loans should do so with discretion and after an honest evaluation of their financial base. With these loans, the worst-case scenario is indeed the nastiest – the loss of a home.
Summary: homeowner loans are gaining popularity in the UK market today. However, one should take these loans with discretion, as the price for non-repayment is a massive one – repossession.
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