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Secured
Loans are loans taken out by homeowners. If you own
your house ( pay the mortgage) you can secure the Loan on
the asset (the house) this gives the lender a greater confidence
for repayment of the loan and can often mean they will lend
you more than with an Unsecured Loan.
The
term Secured Loan is generally used in the UK with the term
Home Loan being used in the
USA. The meaning being one of the same.
As
outlined in our Home Loan article you will need to own the
house you wish to secure the loan on and as such you will
need equity in that house.
Secured
loans have become popular in recent times due to the ever
increasing house prices in many countries. With the booming
housing market investors have bought many houses to rent
out. They offer them 2 income opportunities, firstly the
rent is designed to pay the mortgage and many people make
a living from this alone. At the same time the house prices
increase and as such in years and decades to come the investor
has an asset with a hugh equity unless they have used the
equity to secure loans against. As a result of this type
of investment the house supply has not been able to keep
up with demand and as such the general prices increase more
and more, giving the average homeowner a healthy lump of
equity locked into their home.
In
order to get at this equity you can take out a secured loan
and so enjoy the benifits of the house price increases.
Homeowners
can finance their debt and consolidate with Secured
Loans
THINK
CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR
HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS
ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT
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