by : Eric

Going by the current tends in the market; there are more than 1,000 banks, high street financers, online lenders and others who offer secured loans to the public. Its value as a financial product is very high. It is a low risk avenue for the lender. Any which way he gets to collect his investment. Whether through the monthly payments or by repossession of the borrower's assets, he gets to recover his money.

That's not the case with unsecured loans. That is why more and more banks and other financial lenders are turning hostile to non homeowners. According to reports, HBOS has cut down on its unsecured loans by 4pc to ?6.6bn in the year2006. Even if they do grant unsecured credit to borrowers, they prefer to do so to homeowners.

To obtain secured loans, the borrower has to be willing to give his home as a security in lieu of the loan amount. The borrowable amount is generally in between ?5,000 to ?250,000. However, the amount may differ from case to case because the biggest criteria for giving out loans are the prevailing equity in your home. Sometimes, the lender may also provide loans almost up to 125% i.e. loans against negative equity. Normally, the amount is freezed at 90% of the available home value.

The basic terms for can be summed up as:

• Your home equity/ value of your property
  
• Your repaying capacity which depends on your credit score and disposable income
  
• Your personal circumstances, such as your annual income and the number of dependents in the family

One of the biggest benefits of this loan is that it attracts the lowest APRs. It also comes with flexible repayment options and various interest plans. In a way, secured loans are like a second charge on your property