Secured loans are a funding option that uses an asset as security. The most common assets used are properties. However, some lenders may be willing to accept other valuable possessions.
The risk is that if you default on your monthly repayments, your lender could repossess your home. Therefore, you must judge your situation properly.
Another problem arises when you want to move house. So, this blog will explore whether it is possible to move house whilst a loan is linked to the property.
Can you move house with a secured loan?
Generally, most people will be required to pay it off before moving to a new property.
However, in some cases, lenders may be willing to transfer the loan over to the new property. This depends on the level of equity available in the new house and other affordability factors.
If you are considering this, you should contact your lender first. They will be able to tell you if your aim is achievable.
How to pay off your secured loan before moving?
If you are unable to transfer the loan over to a new property, there are some different methods you could use to pay it off.
Firstly, the money you get from selling your property could help to pay off the secured loan. This will depend on the amount of money that was originally borrowed.
The idea is that when putting your property on the market, you should aim for a price that covers the remaining cost of your mortgage plus any other debts secured on the property.
But make sure you calculate this carefully. You may face challenges if the money from the sale doesn’t cover the cost of the debts.
Another method that could be used is to pay off the secured loan in full before moving house.
This is only possible if you have the funds available. So, this may not be a viable method for everyone.
However, if you are lucky enough to have the savings to pay off your secured debts you should consider using it.
An unsecured loan could also be used to pay the debt off. However, this depends on the amount that remains.
With an unsecured loan, an asset is not used as security. So, you could take out one of these loans to pay the secured debt off and move property with the unsecured debt.
Conclusion
These different methods may help you in situations where you need to pay your secured loan off to move to a new house.
Taking out any additional loans can bring financial challenges if they are not properly implemented.
It is therefore particularly important that you carefully consider your borrowing options and situation before making any plans.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
