A secured loan is any loan that requires the borrower to provide the lender with some form of security. In the case of secured loans, the security will be the borrower's property, regardless of whether it is mortgaged or owned outright. Loans secured against property that is already mortgaged are known as second charges, whereas loans secured against a property owned outright with no existing mortgage in place are known as first charges.

Secured home-owner loans are available in varying amounts and for many different purposes, including debt consolidation. The amount available usually ranges from £3,000 to £50,000, although some lenders will consider lending up to £100,000. The amount borrowed is repaid monthly over a term agreed at the outset, which will usually range between three years and twenty five years. You may be charged a penalty if you repay your loan earlier than agreed.

Lenders charge interest on the amount you borrow, which is referred to as the Annual Percentage Rate (A.P.R). The amount you can borrow, the term available and the A.P.R will all depend upon the equity you have in your property, the lender's view of your ability to repay the loan and your personal circumstances, for example any adverse credit. Subject to your circumstances, you may be able to borrow up to 125%* of the property value. The A.P.Rs quoted by the lender will usually be typical rates, and these act as a guide only as the exact rate offered will be on an individual basis. As a general rule, it is advisable to compare the A.P.Rs of different loans, as this is a good way to determine how competitive they are.

*Higher Lending charges may apply.

Generally, secured loans are much easier to obtain than unsecured loans. This is because the lender has the added benefit of security, which provides protection in the event of a customer's inability to repay. This also means that persons who are self-employed, have recently changed jobs or who have adverse credit can take out a loan. They are also useful for larger amounts or where the applicant requires a longer repayment period.

Unsecured Loans   

Otherwise known as personal loans, the lender does not require any security for its loan that will generally be charged at a higher rate than the secured loan. The maximum term will be 10 years and the maximum loan £25000.

Bridging Loans   

This is a loan that is usually taken out to solve a temporary cash shortfall that may arise when buying a property or business, or perhaps paying for a renovation.

A typical example of when you may need a one would be if you want to buy a second property before you've sold your first.

Or you may need one if you're buying property at auction.

As they are more risky for the lender than the usual housebuyer's loan, bridging loans are more expensive and should only be used where you are fairly certain to repay them within about 6 months.

Depending on the lender, a Bridging Loan can be obtained by the self employed or people with bad credit. In other words to those who traditionally have found it more difficult to get loans and mortgages.

THE FINANCIAL SERVICES AUTHORITY DOES NOT REGULATE PERSONAL LOANS.