To produce this post, we partnered with our partners at Small Cash Financial
There are many advantages to owning, especially if you have to borrow money. Homeowners can use their home equity to access more mortgage options: mortgage refinancing, secured lines of credit, secured personal loans, and more.
Our partners at Small Cash Financial have provided us with information on the secured personal loans you will want to see if you own.
What are the advantages of a secured personal loan?
A secured personal loan can help you get a lower interest rate than an unsecured personal loan. Since the loan has an asset (your home), you are more likely to repay your loan and meet payment deadlines. Your lender will therefore be more inclined to offer you a lower interest rate, which will save you money during the term of your loan.
You could also get more money by guaranteeing your loan. With Small Cash Financial, you may qualify for a guaranteed personal loan of up to $ 30,000. A larger amount can be helpful if you borrow money to reinvest in your home (whether it’s emergency repairs or planned renovations) since renovations can require significant upfront expenses.
Finally, a secured loan allows you to enjoy a longer repayment period. With Small Cash Financial, you can take up to 10 years to repay your secured personal loan. A longer repayment period gives you more flexibility and more affordable loan payments. These are easier to integrate into a budget and manage and help you meet deadlines (and restore your credit).
What are the disadvantages of a secured personal loan?
Here are some reasons why a homeowner could opt for an unsecured loan instead of a secured loan:
- The application process for a secured loan is a little longer : your lender will have to take the necessary steps to determine the value of your home. If you need the money the same day of the application, an unsecured loan could be a better option. However, if you can wait before getting your loan, we recommend that you opt for a secured loan to take advantage of the best possible interest rate.
- You can repay your loan before maturity, but you will have to pay a fee : some people like to have the option to repay their loan before it expires. At Small Cash Financial, you can repay your secured loan before maturity, but you will have to pay a fee (the amount of fees depends on the loan amount). With an unsecured loan from Small Cash Financial, you can repay your loan before maturity without paying a fee.
Why should I opt for a secured personal loan rather than another type of homeowner financing?
A Guaranteed Personal Loan is an installment-based loan that can be repaid in a given period and through fixed and regular (or staggered) payments. Installment-based loans lead to manageable loan payments since the amount is the same every month. In addition, your interest rate and the term of the loan are fixed for the duration of the loan, which means that you will never have to ask yourself if the amount of your payments will increase.
For installment loans, a portion of the loan payments are used to pay the interest and another portion is used to repay the principal. As you pay down your loan, a little more money is used to pay off your debt rather than interest charges.
As for the secured line of credit, it has a low interest rate, but no fixed payments. You will have to make the minimum payments on your balance in order not to affect your credit score, whereas for a line of credit, it is you who establish the amount of the monthly payments and the lender does not establish a fixed duration of repayment of the loan (it establishes only the minimum amount of the payments). This more flexible approach may be appropriate for some people, but if you like having a payment schedule, a revolving line of credit may not be the answer for you.
Some people choose to refinance their mortgage. This allows you to borrow money even if you have a mortgage since you release part of the equity in your home. Some people may qualify for a lower interest rate when refinancing their mortgage, making it a good option to borrow money. However, it is not always possible to obtain a lower interest rate. It can also be difficult and expensive to refinance your mortgage if you have a fixed term mortgage. In this case, you will need to consider other borrowing options.
Deciding how and where to borrow money is not an easy decision to make. Fortunately, as a homeowner, there are several options available for you to enjoy a lower interest rate and get more money.
Are you wondering if a secured personal loan would suit you? You can get a free loan quote from Small Cash Financial to find out how much you could get and what your payments might be. No obligation or impact on your credit score. This will take only few minutes.