A secured or Homeowner Loan as commonly known as is a loan that’s secured against your property. This means that the homeowner loan provider will place a second charge on your home, after your first charge which will be your mortgage company. The money you borrow is based on the equity in your home. You can then use that money for whatever you want; to buy a car, consolidate your credit or make some home improvements. A Homeowner Loan is a secured loan, so you could borrow more money than with a typical unsecured loan.

Secured home-owner loans are available in varying amounts and for many different purposes, including home improvements, exotic holiday or debt consolidation. The amount available usually ranges from £3,000 to £100,000, although some lenders will consider lending up to £150,000. 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, and you should check each lender’s individual policy with regards to this.

Lenders charge interest on the amount you borrow, which is referred to as the APR (Annual Percentage Rate). The amount you can borrow, the term available and the APR 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 100% of the property value. The APR’s 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 of thumb, it is advisable to compare the APR’s from different lenders, as this is a good way to determine how competitive they are.

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.

Non Regulated Loan Agreement

Loans of £25,001 and above taken before the 6th April 2008 were not regulated by the Consumer Credit Act and are known as Non-Regulated. Whether your loan is Regulated or Non Regulated will affect some aspects of your loan such as your early settlement charges and lump sum repayments. All loan agreements should specify whether they are Regulated or Non –Regulated. As of the 6th April 2008 all secured loans, regardless of the amount will be regulated by the Consumer Credit Act and will therefore have a regulated loan agreement (Prior to the 6th April 2008 loans of £25,000 and under were regulated). The CCA grants a borrower certain rights which are not necessarily available for loans not regulated under the CCA. These include the need to provide the borrower with an advance copy of the loan agreement to give them a period of time to consider there loan. During this period neither the lender nor the person arranging the loan for you is allowed to contact you, although you may initiate or request contact. At the end of this period you will be sent signature copies of your loan agreement. The consideration period will end on the earlier of your returning the signed loan agreement and 8 days after the sending of the signature copy of the loan agreement.

Repayment Problems

If you do experience difficulties with your repayments, seek advice from your lender as soon as you can. Remember, your property acts as security for your loan and it is therefore at risk in the event of any repayment problems. The earlier you seek help, the more sympathetic your lender is likely to be. You can also seek help from voluntary organisations such as the Citizens Advice Bureau.