Few banks are in business simply to hand out money. Equally, people who frequent these banks in search of a loan wouldn't consider themselves in the business of borrowing money. Yet, currently nearly 75% of the houses bought in the UK are financed with a secured loan in one form or another.

A secured loan UK is a loan which is offered to those people who are willing to put up some kind of property, called collateral, to guarantee payment. A potential borrower can use anything of value for collateral, but since so many use their homes, a secured loan is also called a homeowner's loan. It is initiated with the purchase of a home and spread over a period of five to twenty-five years or more.

Banks in the UK are far more likely to offer borrowers a secured loan than one that is unsecured. This is because there is less risk involved with a secured loan; if a person fails to pay, the bank can simply take possession of their collateral. While this can be a dangerous condition for people without good money management skills, it can also be beneficial to both sides.

A secured loan UK allows banks to pay a lower insurance cost, since there is always a guarantee of payment one way or the other. This savings is then passed on to borrowers, who pay a lower interest rate and a lower monthly payment. Often the repayment options of a secured loan are generous as well.

A secured loan can come with payment holidays, which are agreed-upon breaks in payment, and capital repayments, whereby loan holders can repay their loan early without having to pay a penalty.

Applying for a secured loan UK does not usually require the payment of any up-front fees, including survey fees or legal fees. In addition, borrows have the option to insure their payments, which guarantees that even in the event of the loan-holder's injury or illness, the loan is paid on schedule.

In order to receive a larger secured loan, homeowners are encouraged to keep their house well-landscaped and maintained. This increases the property value of the home and the appraisal value of the house, which is how banks decide how much an applicant should be allowed to borrow.

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About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.