Secured Personal Loan

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A secured personal loan is secured against your home, so it's only available to home owners. The advantage over unsecured lending is that by putting up collateral you benefit from a low interest rate. Be aware though that a secured personal loan is usually at a variable rate.

A secured personal loan is also called a homeowner loan - because your property is put up as security for the loan. So if you don't have a mortgage or own your property outright then an unsecured loan is the only way forward.

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The world of secured personal loans is changing though. Right now, you get a better rate on a secured loan, not just because of the property, but also because in most cases the loan is at a variable rate, just like a mortgage. Therefore you get offered a near-base interest rate; which is great for buying the car or holiday you wanted - some banks will only lend at their best rates for home repairs.

However, as we become more European, we are likely to move to the continental system; where variable rates are almost unknown; and most mortgages and large loans are at a fixed rate. This will almost certainly push up rates, but that will also mean there's little difference between a secured personal loan and an unsecured loan. Use a secured personal loan, for larger borrowing amounts, and over longer periods - very much like a second mortgage and respected as such in the lower rate.

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