Also known as second charge mortgage, secured loans are provided against the equity available in the home. In most cases, the loan is up to 90 per cent of the available equity. However, in some cases, the lender might give up to 125 per cent LTV or loan to value. The maximum borrowable amount is £250,000 and the interest rate can be as low as 6.7 per cent.

Some lenders may also offer promotional schemes, such as discounted interest rates, cash back offers and free ipods and notebooks. Besides these, the other benefits include extended repayment periods, and variable and fixed interest rates. The only drawback, if it may be called that, is the long processing time associated with secured loans. As property is involved, the entire approval period is a bit longer than unsecured credit.

One of the good things about secured loans is that it can be availed by those with a bad credit history. Of course the interest that will be accrued against adverse credit holders will certainly be more than the interest rate offered to those with a good credit history. But, this is the only option through which homeowners with a bad credit history can get their money and that too at a low APR. The presence of an asset cuts away the stigma attached to a bad credit file.

Get your home equity evaluated before applying for secured loans. Some of the documents that are going to be needed include-

• Proof of residence


• Proof of ownership of house


• Poof about or lack of outstanding mortgages against the house