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Secured loans have become very popular over recent years, particularly in light of rising equity levels stemming from rocketing house prices in the UK. This increase in equity has enabled many homeowners to enjoy the financial leverage of being able to borrow against their home, and homeowners have taken advantage of this ability to get the finance they want for anything from consolidation of debts or home improvements to purchasing a car or paying for a dream wedding.

However, it is important to remember that there are pros and cons to taking out a secured loan, and in order to make an informed decision with regards to whether it is the right option for you it is important that you weigh up the pros and cons to determine whether a secured loan will suit your needs and circumstances.

The pros

- Secured loans offer greater borrowing power than unsecured loans. However, the amount that you can borrow will depend upon a number of factors such as your equity levels, your financial and employment status, and your credit history.

- Secured loans are often available to people with bad credit who cannot get any form of unsecured finance due to the extent of the damage to their credit. However, higher interest rates are usually charged than they would be on a loan to someone with good credit.

- The repayment periods on offer them are far longer than with unsecured loans, with some lenders offering up to thirty years by way of a repayment term. This can help to keep monthly repayments down by spreading the loan over a longer period.

- You can get some very good rates on secured loans, with a choice of lenders offering competitive deals. However, your rate of interest will depend on your credit rating and other factors. You should compare the different ones available before you make a decision. One way of doing this can be via a broker.

The cons

- Secured loans are secured against the home, and this means that if you default on repayments and fall into arrears you could risk losing your home. You therefore must ensure that you can afford the repayments on your loan.

- If house prices fall sharply after you have taken out one you could find that you fall into negative equity where you owe more on your home than the property is actually worth.

- Secured loans are available over a long term, and although this can keep repayments down it can also leave you in debt for a long time. If you then want to repay the debt early, or even refinance, you could find that you face hefty financial penalties.