Whenever you begin the search for how to finance a big change in your life - be it a new car, home improvements or even to consolidate all your existing debts, the chances are you'll come to a crossroads: do you want a secured homeowner loan or an unsecured personal loan?

Both have their merits but both have drawbacks too so you have to choose carefully. Cost is a big consideration and there are differences between the two types of loan that will make your choice easier.

How secured homeowner loans work - and how much they cost

Secured homeowner loans are the most popular way to borrow lots of money. They are often called 'home loans' because invariably you will be putting up your property as security against the money you borrow.

Because you're offering your home as a guarantee, lenders are willing to lend you more money. They can rest easy because they know they can repossess your property if you fail to keep up payments.

That's may seem a big risk for you to take, but if you follow the golden rule of "don't borrow more than you can afford to pay back", then you should be fine.

With a secured homeowner loan you can generally borrow anything up to £50,000 - and some lenders will consider applications for as much as £100,000. That's a lot of money and a major benefit over unsecured loans as you'll be lucky to find a lender who will go any higher than £25,000 for an unsecured, 'personal' loan.

And because you're borrowing more, you can borrow for longer, too. This will reduce your monthly repayments, but will also increase the total amount you end up paying back. So don't increase the term of your loan just for the sake of it - it'll cost you thousands in the end.

For example, if you borrowed £15,000 with at a rate of 7.94%, over ten years you'll pay back around £21,700 and your monthly repayments will be in the region of £180.

If you increase the length of the loan to 15 years, however, you'll reduce your monthly outgoings by some £40, but at the same time you'll pay back almost £4,000 more by the time you've finished.

Interest rates on popular secured loans range from 7.66 per cent to 8.4 per cent - but there are some as low as 6.3 per cent.

To find the best secured homeowner loan fill out our simple form for a free no obligation quote.

Let's get personal - unsecured personal loans - the alternative

Personal loans are more of a risk to lenders because strictly speaking there's no guarantee that they'll get their money if you don't pay up.
But don't take that meaning it is risk free - lenders have ways to recover the amount remaining on unsecured loans too and you are always responsible for paying off what you owe.

Cost-wise there's not much to choose between an unsecured loan and a secured loan, although the unsecured versions do tend to have slightly cheaper rates - currently the best deals start from around 5.8%.

If you're not a homeowner and need to borrow money, a personal loan will be one of only a few options open to you as you will be unable to take advantage of a homeowner loan.

Overdrafts and credit cards are also options, but they are expensive and can't realistically offer you much more than a couple of thousand pounds. So an unsecured loan may be the best option for you.

Unsecured homeowner loans offer good value - if you borrow £5,000 over five years with at a rate of 6.3%, you'll only pay back £5,822.40 with monthly repayments of as little as £97.04.

That's why these loans are often seen as a good way to consolidate your debts - if you've got several thousand pounds worth of credit card debt stuck in your wallet, committing to a payment plan through a good value unsecured loan is a good way to get out of the red.

Whatever choice you go with, make sure you stick to the golden rule - borrow what you can afford, and no more. If you find yourself in a position where you can't meet your repayments you should talk to your lender before the problem gets out of hand.