What Is A Secured Loan And How Is It Used

There are so many different sorts of loans out there it can often get very confusing trying to decipher one from the other. Secured loans are often at the center of confusion and people tend not to be able to figure out what they are.

Well, it’s simple really; a secured loan is a loan that is secured against a property, otherwise known as a home owner’s loan. These loans are different to a personal loan because there is some collateral involved; in this case it is a property or properties of some sort or another.


These loans will require you to be a homeowner with a mortgage or a paid mortgage. Either way you must have a home or property of one sort or another. This will be seen as a security and is also known as the first charge if it is still mortgaged. The secured loan will be known as the second charge in this case. If you are in the happy position of having repaid a mortgage and own the property outright, then the loan will take the place of the mortgage and is known as the first charge.

Secured loans can be a great way to unlock potentially high levels of credit and are a great way for you to get together some money that you may otherwise struggle to get. This can then be used for a big purchase, to consolidate debt or even to make improvements to your home.

One of the reasons a lot of people tend to take out a secure loan is debt consolidation. If you have a large debt in a number of areas, a secured loan allows you to repay the full amount. This in turn allows you to cut down on the interest rates and pay off the money in one easy lump sum.

Lump Sum

This lump sum may be offered a significantly lower rate of interest than the debts you were trying to meet. Businesses such as Baker Financial often offer quite lucrative rates of interest when compared to the rates you are repaying.  It frees you up from credit cards, store cards and other loans and often lowers the amount of debt you pay as there is less interest owed.  Even if you have poor credit, these bad credit secured loans can be a significant help.

Secured loans can also be great if you wish to make improvements to your home or fund a large purchase. This could be required for any number of reasons and a secured loan is a great way of meeting these financial needs.

Of course, in the case of an extension or a home improvement, you are often merely investing in your property and should see it gain in worth with time. This can be a wise move and a great way of using a secured loan of one sort or another.

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Mark Montoya has been working in personal branding for more than a decade for hundreds of online and offline companies, small businesses and individual service professionals. His focus has been toward improving the way jobseekers find employment on the Internet. He has synthesized his expertise by helping job seekers obtain their ideal choice of employment over the Internet on his sites MyOnlineCareerSpace.com and MyOnlineCareerCoach.com, and through his books 101 Tips Every Job Seeker Should Know and The Ultimate Online Job Search eBook.

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