Secured loans are loans that are “secured” against a valuable asset of yours. This asset is offered up by you as “collateral”.
This means that if you start failing to make your repayments towards the loan, then the lender has the right to seize whatever asset you put up as collateral and sell it off in order to get his/her money back.
They are typically used to borrow relatively larger sums of money. Secured loans are typically used to borrow amounts upward of £10,000.
Although you can borrow smaller sums of money through secured loans as well. Typically, secured loans start from £3,000.
They typically have lower interest rates than unsecured loans since they are less “risky” for lenders.
That being said, they are much riskier for you as a debtor. Thus, you must thoroughly assess your financial situation before you enter into any secured loan agreement.
There are a number of different examples such as home equity or homeowner loans, second charge mortgages, first charge mortgages as well as debt consolidation loans (although unsecured debt consolidation loans also exist).
A mortgage loan is the prime example of a secured loan. The home you buy as a result of this loan is what you put up as collateral.
Down the line, if you start failing to make repayments towards your mortgage loan, then your home could be repossessed by the lender and sold off.