We have teamed up with 3 secured loan partners to compare the secured loan market to help you find the best possible secured loan for you. These are Believe Money who are authorised and regulated by the Financial Conduct Authority. (FRN 786476), Fluent Money® Limited that is authorised and regulated by the Financial Conduct Authority (FRN 654425) and FinTech Limited that is authorised and regulated by the Financial Conduct Authority (FRN 815900)
Get helpful advice
Speak to one of the loan advisers from Believe Loans, Fluent Money® or FinTech to discuss the options available for you. For your peace of mind, there is no obligation or charge, we are here to help find you a secured loan which suits your needs.
Loans for Homeowners
Secured loans also known as second-charge mortgages (and homeowner loans) could be an easy way to borrow a large sum of money at a potentially lower rate, as the loan will be secured against your home (property). Believe Loans cover 90% of the market, Fluent Money® completes more secured homeowner loans than any other broker and FinTech are specialist in long term finance
What is a secured loan?
A secured loan also known as a homeowner loan is a sum of money you could borrow which is secured against your home.
Security allows you to borrow more money compared to unsecured loans available in the market. You are unlikely to get a larger sum of money (more than £25,000) with unsecured loans, however with secured loans (home owners loan) you could easily borrow a large sum of money up to £1,000,000. Lenders will look at the value of your home, as well as your personal credit history when deciding whether to offer you a secured loan. You can also pay your secured loan over longer repayment terms. Usually you can repay from 3 to 30 years.
A secured loan, also known as a second mortgage or a homeowner loan, is a type of loan that is guaranteed by a specific asset that you own, such as your home or other property. As with all loans, it works by you borrowing money from the lender which you pay back with interest. The loans are called secured because the repayment to the loan company is secured by a charge on your home or, less often, another valuable item. This means that you can only take out a type of loan which is secured if you own a property or sometimes another valuable item such as a car to use as security. It is a way to borrow larger sums of money than you would normally be able to borrow with an unsecured personal loan. Taking one out usually means you can borrow more money than you would otherwise have been able to at a lower rate of interest. This is because potential lenders may see you as a more reliable borrower with less risk attached.
If you do not meet the repayments then the loan company will use the charge to take possession of your home and sell it to recover the money due to them.
Using security, or a charge on your home, allows you to borrow more money compared to the unsecured loans available in the market. Unsecured loans, sometimes referred to as personal loans, are typically limited to borrowing amounts of up to £25,000. However, with the strength of your credit score and financial history, you have the potential to borrow even larger amounts, up to £1,000,000 in some cases, by providing security. This is dependent on the value of your property and your creditworthiness.
Secured loans often have longer repayment terms in comparison with unsecured or personal loans which can be an advantage because it can result in lower monthly repayments. The usual length of time to repay the loan for a secured loan is between 3 and 15 years although repayment terms of up to 30 years can also be agreed in some cases.
What can I use a secured loan for?
These loans can be used for any number of reasons which require a large sum of money. You will always need to tell the lender what you intend to use the money for, including funding home improvements such as a new kitchen or bathroom, a conservatory, replacement windows and doors, garden landscaping or even an extension to your property. Other homeowners take out a secured loan from their mortgage lender to buy a new car, pay for a wedding or to consolidate existing debt, perhaps over a longer repayment period. Consolidating credit cards and personal loans can help you budget by having just one monthly repayment to make, and the interest rates can be lower than credit card borrowing.
Who will qualify for a secured loan?
Each lender will have their own eligibility criteria. However, most will have upper and lower age limits and require you to be a UK resident. You will need to be able to prove to the lender that you have a regular income to enable you to meet loan repayments. You are more likely to be approved for a loan if you have a stable address history
What length of repayment terms are available for secured loans borrowing?
This will depend on the reason for the loan. You can discuss this in greater detail with our advisors. The terms a lender will offer will also depend on your age. Typically, if you are older you will not be able to spread your borrowing over quite such a long term. You should bear in mind that the longer the term of the loan, the more you will pay in total for the loan because you will be paying interest for a longer period. It is cheaper in total to borrow at the same interest rate over a shorter loan period. APR is an important factor to consider when comparing secured loans.
I am self-employed; can I still apply for a secured loan?
Yes, you can still apply for a secured loan. These home-owner loans are available for self-employed homeowners as well as those who are employed. If you are self-employed you will need to provide the following documents in order to apply for a secured loan:
1. Proof of your income
2. Bank statements (your business bank statements, to show your income from self-employment)
3. In some cases, a lender will want to see 3 years' worth of your business accounts.
We own our property as joint property owners - do we both need to apply together for a secured loan?
Yes, if you own a property jointly with someone else then you are required to make a joint application. Both owners will be liable for making repayments and paying the full loan within the agreed terms.
Will there be a credit check when I apply for a secured loan?
As part of an application process, the lender will carry out a credit check. This process helps lenders to decide how much they can lend and how long for. Lenders are also required to lend responsibly, and only lend money to people who can afford to pay it back. There will not be a credit check based on the application on this site, it is only when you have discussed the application with an advisor and agree to move forward that the check will be made.
How much can I borrow as a secured loan?
The amount that you are able to borrow on a secured loan will depend on how much equity you have in the property you want to borrow against. Equity is the value of the property after the cost of repaying any existing mortgage has been taken away. For example, if your property is worth £200,000 and you already have a mortgage with £150,000 outstanding then the equity in your property is £50,000. The size of the loan as a proportion of the value of your home, known as the loan-to-value (LTV) ratio, may also play a role in determining the maximum amount you can borrow. Our mortgage calculator can give you an idea of how much you could borrow based on your income.
What are the secured loan interest rates based on?
The interest rate you will pay on the loan will depend upon a number of factors. The main factors influencing your interest rate are:
The amount you are looking to borrow
The amount of equity in your home
The loan to value ratio, that is the ratio of the borrowing secured against your home to its value
How long you are looking to borrow for
Your credit history
The current interest rate set by the Bank of England
Interest rates vary considerably between lenders, with typical interest rates on a secured loan varying from 6.6% to 20%. If you have a bad credit history, the interest rate you will pay will be higher than for someone with a good track record with credit.
The interest rates for secured loans are often lower than for unsecured loans. This is because when a lender gives you an unsecured loan, they are taking a bigger risk. With a secured loan, the lender has security for the loan if you do not meet the repayments.
Can I fix the interest rate on a secured loan?
Secured loans can be either fixed rate secured loans or variable rate secured loans. If the interest rate on a secured loan is fixed, it may be fixed just for a short period and then go back to the loan company's standard variable rate. Other fixed rate secured loans may offer a fixed rate for the whole term of the loan.
If you choose a fixed rate secured loan it can help you to budget because you know that your loan repayments will always remain the same.
The interest rate on a variable rate secured loan may change during the term of the loan. The interest rate will depend on external factors such as the Bank of England base rate. If your secured loan has a variable interest rate, your repayments could increase or decrease, and the total amount payable on the loan could also increase or decrease. If interest rates rise then you could find yourself paying a lot more in loan repayments than you had originally planned. In the worst case, you could find the repayments unaffordable. It’s also useful to use APRC to compare secured loans – this is the interest rate plus any mandatory fees, so it can give you a better idea of the full cost of the loan.
If you do not make a repayment when it is due, your lender will usually charge you an extra fee for missing a monthly repayment. The lender may also charge you additional interest for the unpaid payment. If you do not make payments regularly, the lender may report you to a credit reference agency. This will adversely affect your credit profile and lower your credit score. It could make it more difficult and expensive for you to get credit in the future. The lender can ultimately get a County Court Judgement (CCJ) against you, and start the process of repossessing your property to recover the sums which are due. Repossession means that the lender can force a sale of the property against which the loan is secured.
Ultimately, if you do not make the repayments on a secured loan, the lender can sell your property and you would lose your home. Your home is always at risk, making it vital that you contact your lender to agree a plan if there are any difficulties in meeting repayments.
If the lender has to sell the property to cover the amounts due and there is more than one secured loan or mortgage in the property, the lenders are paid out in the order in which the loans are registered against the property.
How long will it take for me to take a secured loan out?
The length of time that the process takes from your application to receiving the funds will depend on your circumstances and the lender you have chosen. It could vary from 2 to 20 days, or in some cases a few weeks.
Is it possible to get a secured loan if I have bad credit?
Yes, it is possible to get a secured loan even if you have bad credit. If you have bad credit, you may be more likely to be approved for a secured loan than an unsecured loan because it reduces the risk to the lender. If you default on an unsecured loan, the lender has no security, so it is more difficult for them to recover the money they are owed. However, the interest rates you will be charged if you are approved for a secured loan may be higher than those charged to someone with a good credit rating. Not all lenders will consider you for a secured loan if you have a bad credit rating, but having a good credit score reassures lenders that you're likely to pay them back. We work with a very large panel of lenders who may be willing to offer you a secured loan even with bad credit.
Is it possible to pay back my secured loan earlier?
Yes, you can pay back your loan earlier than the scheduled repayment date. You may be charged an early repayment fee but this will be lower than the remaining interest on the loan, meaning that the total cost to you of the loan will be lower if you repay it early.
What is the application process for a secured loan?
Applying for a secured loan is similar to applying for a mortgage. The lender will require your identity details, details of your employment history and current income as well as details of your outgoings and existing debts. You will also have to tell the lender what you intend to spend the money on. The lender will check that the loan repayments are affordable for you. It is vital to be accurate and honest in the application process.
What else should I consider before taking out a secured loan?
You should always be aware that if you do not meet the repayments on a loan secured on your property, your home will be at risk because the loan company can sell it to recover the money due to them. It is essential to think very carefully about whether or not you can afford the repayments, and how you will cope if it is a variable rate loan and interest rates go up. You may wish to consider taking out an insurance policy to cover the loan repayments if you are unable to pay them due to illness or redundancy.