Secured loans require you to provide the lender with some form of security. Most often, the security levied is your property ? regardless of whether it is mortgaged or is owned outright. A loan secured on a mortgaged property is known as a 'second charge', whereas a loan secured on a property that is owned outright is known as a 'first charge'.



Depending on the amount of money you borrow, lenders will charge interest which will depend on the amount of equity you have in your property, the lender's assessment of your ability to repay the loan and your personal circumstances. Most lenders will also conduct a credit search in order to check your credit worthiness and repayment history for any other financial products you may hold.

Unsecured loans (often referred to as personal loans), on the other hand, do not require the borrower to put up any form of security against the loan. However, the amount available through an unsecured loan is much smaller than through a secured loan; while the repayment terms are often shorter and interest rates higher. This means paying off an unsecured loan is likely to cost more money than a similar secured loan.

Unsecured loans allow you to borrow money without having to provide security against it. Instead, the provider will base their decision on granting you a personal loan by using your personal credit history. This is verified by a credit check to determine your credit rating and is the most important factor in determining the success of your loan application. This rating is based on many factors such as employment history, existing debts, previous repayment history, etc. As unsecured loans are more difficult to obtain, you will have to show a good rating to be successful.