Quite simply a secured loan is loan that a homeowner can take out that is secured against the value of their property assuming there is enough equity left in the value of the property once any outstanding mortgage is taken into consideration. For instance a secured loan lender in this current financial climate would not be comfortable securing a loan against a property if the total borrowings of the mortgage and the proposed secured loan went over 75% of the value of the property, so if a homeowner owned a property worth £100,000 and had a mortgage of £50,000 (50% of the value) then a further 25% could be potentially borrowed (£25,000).

Be very clear however a secured loan is in effect a second mortgage and shows on a credit check as such hence any non payments could result in a repossession of the borrowers home so do not take out a secured loan unless you are sure you can meet the monthly payments, secured loan providers will consider those with poor credit however the criteria (due to the current financial climate) is becoming very stringent as lenders are now very unwilling to risk having a bad debt on their books.

This said there is still a very viable market for secured loans as they allow the borrow to secure funds against the value of their property which is till generally regarded as the most cost effective way of borrowing money, generally a secured loan will mean a lower monthly payment if it is used to consolidate existing loans and debt though again remember you are reducing the equity in the value of your property.

Secured loans can be available for all types of clients including both those employed and the self employed borrower who may find it difficult to prove their income, borrowers with bad credit can also apply though the rates offered will reflect not only the borrowers credit score but also the available equity in their home.

Most secured loans include an option for payment protection which is an insurance covering the borrower against illness or loss of job etc, whilst it is a sensible idea to consider this type of insurance make sure you are familiar with all the small print as you could be paying for something that you can not make a valid claim on.

You have at any time (as with a mortgage) the legal right to pay off the loan at any time however do be aware that redemption penalties will apply, as with most things you would be advised to seek the advice of an experienced secured loans broker.