What are unsecured loans?
Unsecured loans allow you to borrow money without offering up security based on a major asset, such as your home. Here, we explore some key facts.
Key facts about unsecured loans
- An application for an unsecured loan is primarily based on your personal credit rating, financial status and the amount borrowed. You aren’t required to offer your home as security for the loan – however, you are legally bound to pay back the loan as agreed
- The top 3 reasons people take out an unsecured loan is to consolidate debts into one possibly less expensive loan, to carry out DIY projects, or to purchase a car
- When deciding whether or not to offer you an unsecured loan, the lender will look at your personal credit history and assess how much of a risk is involved in lending you money. The rate of interest you are offered will reflect that level of risk
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.