If You Had Taken Out The Insurance That Is

Business, Financing.

What if i can't afford to keep up my secured loan payments - you may be asking that question before you actually apply for a secured loan, perhaps while you' re still trying to decide between secured loans and personal loans. Remember if you' re being offered a longer repayment term and maybe a more attractive rate of interest on a secured loan that' s precisely because the lender has some security.

It' s exactly the sort of question you should be asking at this stage. - that security is your home. That warning should make you pause to reflect on your situation. You' ll have seen the statutory warning, "Your home may be at risk if you do not keep up repayments on a loan secured on it. " Those are not empty words and you should take due note of them. Are you in a relatively secure job where you have the benefits of full pay during normal periods of sickness and the possibility of redundancy is remote? If the answer to both these questions is, "Yes, " then your only potential worries are going to be unexpected long term sickness and unemployment if it does strike out of the blue.

Is your income for the foreseeable future such that you can comfortably afford the repayments? - you' ll have been offered insurance against these disasters and you would be wise to take it up either through your lender or elsewhere. If you don' t pay back what you' ve borrowed according to the agreed schedule they can enforce the charge by repossessing your home to sell it to recover what they are owed. Protection of that kind is particularly important with secured loans because, as the warning tells you, the lenders are securing the money they lend you by means of the charge on your property. Theoretically any balance would go to you. That' s often referred to as your" First mortgage" Once this situation has arisen they' ll want their money back too. However it wouldn' t be as simple as that because, you already have, almost certainly a mortgage on the property which enabled you to buy it in the first place.

If the cause of your problem was one of the events covered by insurance you wouldn' t get into arrears because the insurance would cover your payments during the emergency. - if you' ve taken all these things into account and taken steps to insure against unforeseen calamities that' s fine. If you had taken out the insurance that is! You' ll be entering into the commitment with your eyes open and all should be well. If you' re asking this question after you' ve taken on the loan that would suggest that your circumstances have changed since the period began, or are about to change. Going back to the original question of what happens if you can' t afford to make your secured loan payments.

Presumably this is something you couldn' t have foreseen at the outset or you wouldn' t be in this situation now. - if you believe it is you must tell both your lender and the insurance company without delay. If your loan is covered by insurance then you need to check whether or not what has happened to you is an insured event. They' ll take charge and you shouldn' t have anything to worry about. It' s worth checking to see whether any other insurance you have might cover the situation. If it' s not covered by your insurance or you didn' t take out insurance you still need to act promptly. If insurance can' t help and you' re on your own so to speak the first thing you must do is get in touch with your lenders and tell them how you' re fixed.

Repossession is a costly and time consuming process involving courts. - although secured loans give them the option to have you evicted from your home so that they can sell it that' s the last thing they want to do. Lenders would far rather come to some arrangement with you that you can manage, and keep repossession as a last resort. The more you allow arrears to build up the more difficult it becomes for them to help and the greater becomes the threat of repossession. For this to be possible you must contact your lenders as soon as you become aware that you have a problem and preferably before you miss a payment. So the blunt answer to the original question is you lose your home and find yourself and your family on the street. One option might be to sell your property quickly, once you realise you' re can' t come to a manageable arrangement with your lender, pay everyone off and start again.

However, if you keep calm and speak to your lenders early when problems becomes apparent it shouldn' t come to that. - there are people who can arrange that for you too. Just don' t panic!