A mortgage is a type of secured loan. However more commonly a secured loans terminology is referred to if you want to borrow on top of your mortgage. This may be because you are unable to remortgage due to charges and penalties or other circumstances. In this scenario a secured loan (2nd charge) may be more suitable.
A secured loans is typically favoured to a personal loan (Unsecured loan) when larger amounts are being borrowed, as it allows you to borrow money over a longer period of time. The loans need to be secured on something you own, such as your home whereas as unsecured loan (personal loan) is not. It is therefore important you understand this as if you miss payments on an unsecured loan then the consequences are much less than missing payments on a secured loan against your property as this could lead to your property being repossessed.
Secured loans typically, will be at a higher interest rate than your mortgage.This is because of where it sits legally in regards to the mortgage and therefore is a greater risk to the lender. A secured loan will form, what is referred to as a second charge. This is where it is registered behind the mortgage in terms of importance. If you were repossessed the mortgage company would get their money first and the secured loan would recover what is left. As you can see this creates a greater risk profile hence the higher rate. Secured loan terms are often offered between 5 - 25 years.
If you would like to get more information about secured loans then please speak to our Independent Mortgage Advisers.