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Security
From a legal point of view, this expression means the property being placed
in mortgage and against which the loan is issued. Occasionally, a lending institution
may agree to make a somewhat larger advance than would otherwise be the case if
an additional form of security were made available. This usually takes the form
of an additional charge against a second property which is not itself in mortgage.
When
we talk about a secured loan it means any form of borrowing where the lender has
a mortgage charge registered against the title of a property. The interest rate
will normally be less than for similar borrowing which is unsecured. In that case
the risk is regarded as higher since there is no property involved which could,
as a last resort, be sold under a court order. If a borrower of an unsecured loan
defaults the lender could lose all the money.