A secured loan is a secondary mortgage, when a second charge lender takes a legal charge over the property, which is added behind your mortgage lenders first legal charge.

 

 

 

 

This will be riskier than a first charge as the lender will be second in the queue if the house is repossessed – if there is nothing left then they wouldn't get anything back.

Because of this higher risk rates are typically much higher than a standard mortgage but there are some instances when they may be a suitable option.

Secured loans can be set up quickly, usually within a few weeks. Therefore, if the money is required quickly a secured loan can be a great option to consider.

If you are struggling to demonstrate the required income for a first charge lender a second charge may be appropriate. Mortgage lenders will require two year's income for a self-employed applicant, but second charge lenders will typically be more flexible and could use one year's income, or even use business turnover.

Secured loans may be available for a higher loan to value than your current mortgage lender is able to offer and also may be more willing to accept adverse credit issues.

Secured loans have a part to play but shouldn't be the first port of call for additional borrowing.

 

Mortgage Quest is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. The Right Mortgage Limited. Registered address: St Johns Court, 70 St Johns Close, Knowle, Solihull, B93 0NH. Registered in England and Wales. Company no. 08130498.