Check your eligibility for a secured loan without impacting your credit score, see the latest rates available for you and get a quote.
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We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
By Matt Fernell, Editor-in-Chief at Finance.co.uk.
A secured loan can help you borrow more at a lower interest rate, but it means putting your property at risk. Here’s what you need to know to find the right secured loan for you.
Borrowing a large amount of money secured against your home is a big commitment. Before you decide to go ahead, work out:
How much you need to borrow: If it’s less than £25,000, a personal loan could be a better option.
How long you need to repay the loan: Work out what you can repay each month and choose the shortest term you can afford.
How much home equity you have: You’ll need an up-to-date valuation of your property and the outstanding balance on your mortgage.
Your credit history: Check your credit record for mistakes and carry out a soft check to understand the likelihood of being accepted.
Whether you want to borrow against your home: Ask yourself how secure your income is, whether you can repay the loan over the long term and if you want to risk losing your home.
A secured loan broker can save you time and effort and talk you through all your options. A broker can also access all the loans on the market and find the best homeowner loans for you.
We can help you find out if you could be eligible for a secured homeowner loan within an hour; all we need is a few bits of information from you, including:
Details of the loan you want
Your outstanding mortgage balance and property value
Personal information, including your name and email address
Our broker will be in touch to let you know if you’re eligible, what the latest rates are, and to give you quotes from some of the UK’s leading secured loan providers.
Any quote you receive won’t affect your credit score, and you could still be eligible even if you have poor credit or arrears.
If you own property and qualify for secured financing, it can be a good borrowing option, but there are pros and cons to consider.
You can borrow large amounts of money, up to £500,000
You can stretch out repayments over a longer term, up to 35 years
It’s easier to get approved because you're less of a risk to the lender
You can get homeowner loans with bad credit because using your home as collateral makes you less of a risk to lenders
If you default on the loan, your home could be repossessed to recover the debt
Extra charges and arrangement fees can be very high
Some loans have variable interest rates, so your repayments could increase
If you want to pay off your loan early, you may need to pay early repayment fees
You could damage your credit score if you miss or regularly make late payments
If you’re unsure, consider contacting a secured loan broker who can discuss your options and answer any questions.
Remortgaging can be an alternative to taking out a secured loan. You’ll need enough equity in your home to release the funds, and upfront fees could be high. You’ll be extending the mortgage term, so you will end up paying interest on your mortgage for longer.
Some lenders offer large unsecured loans specifically for home improvements. You can borrow up to £25,000 and pay it back over a set period. You will need a good credit rating to get approved for this type of unsecured loan - here's how home improvement loans work.
A personal loan is a standard loan from a bank, building society or lender. You do not need to provide collateral, and terms of repayment tend to be more flexible. However, if you’re looking to borrow a large amount, this could be a costly option and mean high monthly repayments.
If you have a good credit score, peer-to-peer lending, also known as P2P, could be a cheaper way to borrow. P2P banking is an online platform that assists people in lending and borrowing from each other rather than a bank or lender.
If you’re seeking a collateral loan to pay off multiple debts, a debt consolidation loan can help. It will allow you to borrow a set amount to pay off various debts, e.g. credit cards, store cards and overdrafts, which you then pay back with one monthly payment.
If you’re having trouble keeping track of what you owe, this can be a helpful way to gain control over your debt and build your credit score.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
As a new homeowner, it's likely that you only own a small percentage of the property’s value. The lower your equity, the higher your risk, so most lenders won’t offer secured finance to customers who’ve owned their home for less than six months.
They are not necessarily less expensive even though the interest rate and APR may be lower. You may have to pay arrangement and valuation fees on top of the amount you’ve borrowed plus interest over a longer period, which could mean you’ll end up paying more in the long run.
There are pros and cons for both types of loans so it depends on your financial circumstances. It makes sense to talk to secured loans brokers to discuss your funding needs so you get the right loan for you.
In theory, you can have as many secured homeowner loans as you like, providing you have enough equity in your property.
No, a mortgage is a loan specifically for buying property or land, whereas a homeowner loan is money you borrow which is secured against your house.
In some ways, yes, because you’re providing the lender with security and are viewed as less of a risk. If you qualify but have a poor credit score, you’re more likely to get accepted for a secured loan over a personal loan.
However, because a number of background checks need to take place, like having your home valued, the process will take more time and effort from you.
