What are the advantages of a real estate loan?

Perhaps you are trying to pay off some debts or want to buy an expensive item, such as a car, but you simply do not have the necessary capital. Perhaps you've thought about taking out a loan in the past, but were worried that you wouldn't be accepted or that you'd have to pay extortionate interest rates. 

People tend to be particularly suspicious of secured loans (loans that are only available to property owners).
A common concern is that if the borrower fails to repay the loan, he will lose his house/apartment or land. This is true in some worst-case scenarios, as long as you stay on top of your payments. Taking out a secured loan can free up the cash you need with less hassle than other types of loans.

Here are some of the main benefits of taking out a home equity loan:

• Secured loans may be easier to obtain. Because your home is effectively used as “collateral” for the loan, lenders are likely to view you as a safer prospect than those applying for an unsecured loan, especially if you have a questionable credit history.
• You'll have more time to get it back. While unsecured loans typically have a repayment period of one to seven years, secured loans typically give borrowers between five and twenty years to repay their loans. This can help relieve pressure if you are borrowing a large amount.
• Monthly payments should be lower. Since the repayment period is likely to be longer with a secured loan, this will typically result in a lower monthly repayment amount. (However, it's worth remembering that while secured loans often have lower interest rates, a longer borrowing period may mean you'll pay more interest in the long run.)
• This can provide greater flexibility. If you're looking to convert fixed-rate debt, such as credit card debt, into variable-rate debt, a secured loan may be the way to move forward. With a variable rate loan, the interest rate charged will fluctuate in line with the Bank of England base rate. This may mean you pay less in some months, but it may mean you have to pay more in other months, so it's worth keeping that in mind.

As with any type of loan, it's important to think carefully before applying. It's not worth paying off one debt only to find that you have a larger debt that needs to be paid off at a higher interest rate or over a longer period of time. A home equity loan can still be a hassle-free and cost-effective way of borrowing—provided you can make the required payments on time.