The Beckhams have some big life changes ahead

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Victoria Beckham admitted to finding life tough out in LA while she was house-hunting for their family prior to hubbie David's big money move to soccer team LA Galaxy.

It wasn't the lack of cash that caused concern for Posh but whenever you begin a big change in your life - be it buying a new car, carrying out home improvements or even sorting out your debts, the chances are you won't find it easy.

For almost all of us, the decision is unlikely to be whether to install a pool or a helipad. Instead, most of us come to a crossroads based on how to raise the cash in the first place: do you want a secured loan or an unsecured one?

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. So read on to find out why you'd want a secured loan, or why not, and how making the right choice could save you thousands of pounds.

Home safe but not home free
How secured loans work and how much they cost

Secured loans are the most popular way to borrow larger sums of money. They are often called 'home loans' because, invariably, you will be putting up your house as security against the money you borrow. These days very few people cover their borrowing against a car or other asset.

You may be wondering how much you can borrow. In theory, because you're offering your home as a guarantee in case you don't pay back the money you borrow, lenders are willing to give you more cash. Lenders can rest easy because they know they can repossess your property if you don't pay up. That's a big risk to take for you but the same rule applies to all loans - don't borrow more than you can afford to pay back, and you should be fine.

With a secured loan you can borrow anything up to £50,000 and some lenders will consider applications for as much as £100,000. That's a lot of cash and is the big advantage secured loans have over unsecured loans. You'll be lucky to find a lender who will go any higher than £25,000 for an unsecured, personal loan.

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 at a theoretical rate of around 7.5%, over ten years you'll pay back around £21,300 and your monthly repayments will be in the region of £178. If you increase the length of the loan to 15 years, however, you'll reduce your monthly outgoings by almost £40, but at the same time you'll pay back almost £4,000 more by the time you've finished.

Let's get personal: The unsecured loan alternative

Personal loans are more of a risk to lenders because, strictly speaking, there's no guarantee that they'll get their money back if you don't pay up. But don't take that as a license to print money - 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 - the best deals tend to 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. You won't be able to get a secured home loan. Overdrafts and credit cards are also options, but they are expensive and can't realistically offer you much more than a few thousand pounds. So an unsecured loan may be the best option for you.

Unsecured loans offer good value - compare the below example to the secured loan route.

If you borrow £5,000 over five years with at a rate of, say 5.8%, you'll pay back £5,771 with monthly repayments of as little as £96.

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 back into the black.

Whatever choice you go with, make sure you stick to the golden rule: borrow what you can afford, and no more. Lenders aren't there to prop you up so if you can't meet your repayments you should talk to your lender before the problem gets out of hand.

Perhaps Posh's plight wasn't as pressing as yours, but even her concerns showed how the big decisions can cause problems.