You’ll likely need to evaluate several considerations before starting an application for a financial product. Whether it’s £500 or £50,000, it’s important to remember that borrowing money,  is a commitment and should be treated as such. In this blog, we’ll share answers to some points you may wish to know ahead of applying for a secured loan, whether that’s with us at Pepper or not.

What are the risks involved in applying for a secured loan?

Before applying for a secured loan, it’s worth taking the time to understand the differences between different types of lending, such as personal loans, homeowner loans, credit cards and more! Each of these products has its place in the right scenario. The key difference with a secured loan is that the lender will secure the borrowing against your property, which means you need to own your home and have an existing mortgage.

As a secured loan is secured against your property, you must always think carefully before taking out additional borrowing against your home. If you fail to keep up with your repayments, your home may be repossessed. Of course, this is the last resort for any lender, but this risk shouldn’t be taken lightly.

Where are secured loans available?

You can access and apply for secured loans in several ways. There are mortgage brokers who specialise in secured loans who can certainly advise you, and there are some lenders to who you can apply directly. Pepper Money secured loans are available via a select number of brokers, as well as directly. When deciding which route to go for, consider the advice you’re likely to need, the fees involved and whether you already have a lender in mind.

When evaluating a lender or broker in today’s world, chances are you will look for reviews. At Pepper Money, we aim to be transparent as possible, which is why we encourage our existing customers to rate us on their experiences to give potential customers a true reflection of real experiences. We’re proud to be rated excellent by our customers and brokers on Trustpilot, and you can view all our feedback to date here.

How can I know if a secured loan is right for me?

The best way to discover if a secured loan is right for you is to conduct some online research, review your finances (do you need to borrow?), and ultimately speak to a mortgage adviser. At Pepper Money, we have a team of mortgage advisers who you can book a call with to discuss your finances and whether a secured loan is right for you.

You can, of course, speak to a broker, as we’ve already mentioned above, but we’d like to point out at this stage that as a responsible lender, we’ll only recommend a secured loan if it’s right for your unique circumstances.

In what scenarios may a secured loan be suitable?

Now that you know the risks and where to go for a secured loan, it’s important to understand the scenarios where a secured loan may be best for you.

As house prices have continued to trend upward in recent years, many homeowners have additional equity built up that they can borrow against. Typically, a secured loan is used when someone is looking to borrow a significant amount, otherwise, they may be better off sticking with an unsecured loan or credit card.

The two most common reasons for choosing a secured loan are to make home improvements or to consolidate existing unsecured borrowing.

In the case of home improvements, this can potentially add further value to your home, improving your position should you wish to remortgage or sell at a later date. And, it’s important to remember that when consolidating your borrowing with a secured loan, your monthly payments may reduce, but the time you spend repaying may be longer. As such, you may repay more over the entire loan term when consolidating your debts.

Will my credit file be affected when applying for a secured loan?

Some lenders like Pepper Money offer the opportunity for you to gain an accurate example of what you may be able to borrow. To do this, you need to share details about yourself, your property, and how much you’re looking to borrow.

The advantage of getting an indication first is that only a soft credit search is completed at this stage, meaning it won’t leave an imprint on your credit record or affect your credit score. If you choose to continue with a full application, at this stage, there will be a hard credit search, which is typical when applying for credit.

Where can I get an indication of how much I could borrow?

Call one of our trusted broker partners to start an application to get an initial quote on a secured loan.