What does security mean?

Sometimes when you take out a mortgage or another kind of loan, you’ll be asked to put forward an asset (usually your house) as ‘security.’ 

This means that if you fail to keep up your repayments, your lender will be able to take possession of that asset and sell it, in order to get their money back.

This might sound scary (and it can very well be!) but don’t worry too much right now. You’ll usually have plenty of warning and chances to catch up on your repayments before your asset is taken.

Nuts About Money tip

Never take out a loan, especially one that requires security, if you’re not confident that you’ll be able to pay it back. The last thing you want is to have your assets taken away by your lender!

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