Secured homeowner loans or second charge mortgages as they are sometimes known, are personal loans secured by a second charge on an already mortgaged property.

Secured personal loans tend to be cheaper than unsecured personal loans, since they represent less of a risk for the lender. Since the loan is secured against your property, the lender has a right to take the asset off you if you don't pay off the loan as you initially agreed. Consequently, the rates of interest on a secured loan will be lower because the lender is taking on less risk.

Secured loans are generally available for sums of between £3,000 and £150,000, repayable over 3 to 25 years, though some lenders may lend more than this. Many lenders will advance as much as 125% of the property value, but this is only likely to be the case with relatively low value properties.

The interest rate is usually a straightforward choice between a fixed or a variable rate, making the choice rather less complicated than when choosing a mortgage. A fixed rate gives you the security that your repayments won't change, but is likely to be more expensive. It also means that your repayments will not be reduced should the lender cut their lending rate of interest, from which borrowers on a variable rate would benefit. This type of product may be available on an interest-only or capital plus interest basis and can normally be used for any purpose.

A second charge mortgage is usually made available primarily to people in owner-occupied homes, including ex-council properties. However, some lenders will lend to landlord owners of tenanted property. As with normal mortgages, there may be different rates of interest available to people with an impaired credit history, or the self-employed who are borrowing without evidence of their accounts.