Unsecured vs Secured Loans: The Lowdown

Homeowner Secured Loans Guide - Page 5 of 7:

What are the advantages of Secured Loans vs Unsecured Loans then? Well, in a word - flexibility! Just compare the beneficial features of Homeowner Secured Loans versus Unsecured Loans...

The ability to borrow more:
Secured Loans will allow you to borrow more than an unsecured loan, although rare a secured loan can be advanced up to £100,000. Whereas with an Unsecured Loan, the usual maximum is restricted to about £15,000, although for blue chip customers, a few lenders may advance up to £25,000.
Borrow over a longer repayment period:
Secured Loans are generally available over a longer term than an unsecured loan, usually between 5 and 25-years, whereas an unsecured loan is generally restricted to a maximum repayment period of between 5 and 7 years.
No restrictions as to use:
Secured Loans can generally be used for any legal purpose, where there may be certain restrictions with an Unsecured Personal Loan.
Adverse Credit considered:
Secured Loan criteria on many plans is designed to help those customers who may have a poor credit history such as county court judgements (CCJ's), credit defaults, or arrears. Unsecured loan plans will not usually consider borrowers who have encountered credit difficulties in the past.
Self-employed considered - even without accounts:
Most Secured Loans will consider applicants who may not have an adequate traditional accounting profile. In other words they will not insist on 3-years audited accounts being provided, and will offer income self-certification for appropriate customers.
Unusual employment features considered:
Some borrowers may have difficulty in providing an unsecured lender with adequate salary details sufficient to meet the lending policy. This may be because much of a borrower's income is made up of overtime, commission or bonuses; whereas Secured Loan criteria on most plans will permit all earned income to be taken into account.
Recent employment and Contract workers considered:
Most Secured Loan plans will consider customers who have only recently started their jobs, as well as applicants whose employment is on a contract basis, provided that the contract has been renewed at least once. Unsecured Loans will usually require a 12-months stability of employment on a full-time basis.

So what are the downsides of a Homeowner Secured Loan? That's a good question, and we have to provide a balanced view, so we need to show you the potential downsides, and these are:

when compared with a remortgage, the interest rate charged will usually be more expensive
when compared with an unsecured loan, the Homeowner Loan is secured on your home, and thus in the event of your default in payments, your home could be at risk of repossession.

So that concludes our look at Secured Loans vs Unsecured Loans, we hope you found it to be useful!

Next up, we'll take a look at Homeowner Secured Loans versus Remortgages and when each of these two types of borrowing may be the most appropriate solution for raising funds.

NEXT: Homeowner Secured Loans versus Remortgages ›

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

Mortgages/Remortgages: The overall cost for comparison is 9.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances. For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

Homeowner Loans: Rates from 8.9% APR variable, but typically 13.9% APR variable. Most customers are likely to receive a lower rate or the same rate as our typical variable rate - learn more about APR. Shire Direct also has a range of non-conforming loan plans with rates up to 19.9% APR. These plans are designed to help those who may have a more difficult credit history, including CCJ's and credit arrears, IVA and bankruptcy problems.
A broker fee of between 0% and 10% of the loan advance may be charged for arranging a secured loan.
All loans subject to status and secured on property.
The actual rate available will depend upon your circumstances. Written quotations on request.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.

Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.