It's the ultimate catch-22.
You want to be responsible and pay down some of your higher-interest loans. Unfortunately, you don't have enough money in your bank account to do this, and you don't have the time to take a second job. You have a family at home that needs you, and you barely have enough hours in the day as it is.
What to do? If you currently own a home or flat and are a resident of the United Kingdom, then you likely have equity in your home that you can use to obtain a secured loan.
How does it work?
A secured loan is a loan that is secured against the equity in your home. You are providing collateral to the lender in the form of equity in your home. By doing this, you are able to pay much lower interest rates and borrow much more money. Why? Because the lender has collateral for your loan, which makes you a much smaller risk.
To figure out how big of a loan that you can take out, simply work out this formula:
Take the total appraised value of your home, and subtract any outstanding mortgages or secured loans on the property. You will be left with your total equity.
Let's say that the total appraised value of your property is 250k pounds. Let's also say that you have a 150k mortgage remaining on your property, plus a 30k secured loan. This would leave you with 70k pounds in total equity in your home.
Most secured loan companies will let you borrow up to 100% of the total equity in your home. This would make the maximum secured loan that you could take out on your home: 70k pounds.
This is not to say that you need to borrow the full amount - this is just the maximum amount available to you.
Even if you have poor credit, CCJs or current arrears on your mortgage, you can still quality for a secured loan. Because you are providing collateral for your loan, many lenders will overlook some of the "blemishes" in your credit history.
As mentioned, one of the biggest benefits of a secured loan is the lower interest rates that you will be paying. A typical interest rate for a secured loan is 7-9% - when you compare that to the 20%+ that is typical of an unsecured loan, the choice is clear. You can take out a secured loan to consolidate your higher-interest unsecured loans, therefore paying much less interest on a monthly basis.
Secured loans are extremely easy to apply for. Simply click the link below, and you will be taken to our five minute application form. Apply today!
