There are two types of loans that individuals and businesses can take out when they need extra funds for projects, repairs and other unexpected expenses, secured and unsecured. Secured loans are loans that are backed by collateral (typically a car or house) that the lender can take if the loan is not repaid. Unsecured loans are loans that are not backed by collateral and therefore typically have higher interest rates.

Key facts about secured loans

  • These loans are also called secured homeowner loans
  • With secured loans, if you default on the payment, you could be made to sell your home to clear your debt
  • Lenders will look at the value of your home, as well as your personal credit history when deciding whether to offer you a secured loan
  • Secured loan rates tend to be lower than for unsecured loans, but there could be extra fees – and of course your home could be at risk
  • People who do not have a good credit history, but do have value in their home, may apply for a secured homeowner loan
  • Why are they called secure? Loans are secured against the value in your property, so are secure in respect to the lender. There is no special ‘secure feature’ from your perspective
  • An alternative to taking a secured loan is to increase the mortgage on your property

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Secured Loans vs. Unsecured Loans

Secured loans typically have lower interest rates because the loan is less of a risk for the bank due to the collateral. Secured loans are also a good way to build credit if you borrow from a reputable lender, such as a bank.

Types of secured loans:

  • Mortgages
  • Secured credit cards
  • Secured personal loans
  • Home equity loans
  • Boat and RV loans

Secured loans are a great loan option for anyone looking to borrow money and build credit as they provide numerous benefits to borrowers. Secured loans are typically easer to obtain because they are less risk for the bank, you can borrow more money than with unsecured loans, and they typically come with longer repayment periods.

With an unsecured loan, you will not have to worry about losing your car or your house if you default on the loan, and you can typically get an unsecured loan even if you have bad credit. However, unsecured loan interest rates can climb above 300%.

Types of unsecured loans include:

  • Unsecured personal loans
  • Credit cards
  • Student loans
  • Car loans

While unsecured loans can be easier for people with bad credit to obtain, the benefits do not always outweigh the costs.

Getting a Secured Loan

In order to get a secured loan, you should first determine whether or not you will qualify. Aside from collateral needed to put up against the loan, you will also need a decent credit score. It also helps to take a look at current interest rates and see whether or not you can afford them. Before you apply for your loan, make sure you choose a reputable lending institution that will provide you with as much information as possible prior to you filling out your application.

Financial calculators and helpful guides

Financial calculators

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Helpful guides

Sometimes we can get inquisitive and want to know more so here are some guides to help you.


Protecting your future is always a great idea. Please feel free to contact us for details.

Stamp duty

You must always factor in stamp duty when considering how much deposit you need to buy a house.


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