In a secured loan, the house of the borrower needs to be pledged as collateral. This is to reduce the risk faced by the lender in case the borrower is unable to repay the loan. Due to a lower risk factor, UK secured loans carry a lower rate of interest. For borrowers with adverse credit this is an easy way to get a loan because otherwise they are denied credit due to low credit scores. Secured loans are also known as home equity loans or homeowner loans.
A secured loan provides no security to the borrower. The term 'secured' refers to security provided to the lending institution or bank. If the borrower defaults on the repayments then there is the risk that they could lose their home. The lender can repossess the house and sell it for satisfaction of his debts.
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This is one of the reasons why many people are apprehensive of obtaining a UK secured loan. A borrower, particularly one who has a bad credit history, should carefully assess his credit requirements and the ability to meet repayments if a uk secured loan is required. It would be wise for a borrower to look into alternative options of availing credit before opting for a secured loan. If no alternatives are possible, then by far the best way forward would be to look around for a UK secured loan with the best market rates and in addition to arrange a payment protection plan.
It is usually possible to obtain a UK secured loan with some type of a payment protection plan added to it. A payment protection plan is in fact an insurance policy which protects the borrower if he or she is unable to meet the repayments due to unforseen circumstamces. If the payment protection is taken at the time of obtaining the secured loan then the amount of the insurance premium is added to the monthly repayments against the UK secured loan. This will ensure that the borrower is protected against any missed repayments against the loan due to some unexpected happening beyond his control like sickness, accident, unemployment, disability, or leave of absence to take care of an immediate family member. If the borrower passes away, then the balance of the UK secured loan is paid by the insurance company and lifts the extra burden away from the borrowers loved ones.
It's always a wise move, as a UK secured loan borrower, to undertake a payment protection plan insurance policy so that the risk of losing your home, which is secured against the loan, is reduced. Lets face it, nothing in life is certain and who knows if things will remain in a constant state of wellness. When times are tough, the peace and security offered by your own home is of immense value. You can protect your most valuable asset and ejoy peace of mind by using payment protection coverage for just a little amount each month.
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