How to get a £150,000 loan

Can I get a £150,000 loan?

If you own a home and have enough equity in your property, you may be able to use this equity as security to borrow £150,000. Your income will need to be sufficient to cover the repayments on the loan (plus any other financial commitments you might have).

While your credit history will be likely to impact the interest rate you’d receive, the good news is that secured “homeowner” loans are commonly issued to borrowers with both good or bad credit.

What can I use a £150,000 loan for?

You can use a £150,000 loan for any number of purposes, including the following:

• Bridging loan. This is a type of loan that covers homeowners looking to buy a new house, who haven’t managed to sell their existing home or need to cover the cost of a new property without a mortgage.
• Business loan. You could take out a £150,000 loan to help cover business costs or expenses, such as the purchase of new equipment.
• Land loan. If you’re looking to buy land to develop or are ineligible for a mortgage, you could take out a land loan to cover the purchase.

How much equity do I need for a £150,000 loan?

Each loan specifies a maximum “LTV”. This is the loan-to-value ratio and it basically means the maximum overall amount of borrowing allowed as a proportion of the property’s value.

For example, if your house was worth £400,000 and you owed £150,000 still on your mortgage, a homeowner loan specifying a maximum LTV of 75% could allow you to borrow an additional £150,000.

However, each application will be considered on its own merit. So unfortunately, having sufficient equity doesn’t guarantee approval, but it can guarantee that your application will be considered.

How much are payments on a £150,000 loan?

How much does a £150,000 loan cost overall?

The loan illustrations above use approximate, rounded figures, based on a flat interest rate. Longer-term secured loans are likely to have variable interest rates. If the rate goes down during the course of the loan, the monthly and overall costs would decrease. Conversely, if the rate rises during the loan, the monthly and overall costs would increase. Current interest rates are low compared to historical averages.

How much income do I need for a £150,000 loan?

The minimum income requirements will vary depending on factors like the term of the loan you opt for. All lenders must be able to demonstrate they are lending responsibly. So in other words, they must be careful to ensure the proposed repayment schedule would be affordable for you, taking into account your income and outgoings. For example, an applicant with a £35,000 salary but relatively low regular financial commitments might stand a better chance than an applicant with a £50,000 salary and exorbitant monthly outgoings.

Ultimately your income is just one important part of the picture on which a lender will assess your case.

Loan companies often specify a minimum income requirement in their basic lending criteria (example below). Crucially, meeting these entry-level criteria means you can apply, but doesn’t mean approval is guaranteed.

What credit score do I need for a £150,000 loan?

When you secure a loan against property, your credit score becomes a less crucial factor – but remains a factor nonetheless. The importance given to your credit score will vary by lender, with some lenders specifically aiming to serve those with bad credit. If you have a damaged credit record, you’ll likely be offered an interest rate that’s higher than the very best rates advertised by lenders.

How long does it take to get a £150,000 loan?

Secured loans can take two to three weeks to arrange and drawdown. Although there aren’t solicitors involved, a property valuation of some form will be required and if there’s a “first charge” over the property, then that lender will also need to give its approval.

These extra steps make secured loans a little slower, but the trade-off for many is access to lower rates and/or larger sums.

How long does it take to pay off a £150,000 loan?

You can adjust your loan term in order to make your monthly repayments more affordable. Similarly, you can increase your monthly repayment in order to clear the loan in less time. As a general rule of thumb, spreading repayments over a longer timeframe normally makes for lower monthly repayments (but a higher overall cost). So it really depends on what you can afford to repay each month.

At a fixed annual rate of 4.0%, a £150,000 loan would take over 17 years to repay if your monthly repayment was £1,000. If you wanted to keep the monthly costs down, and paid £800 each month, it would take more than 24 years.

How do I get approved for a £150,000 loan?

Here is a non-exhaustive list of what matters to a lender when it’s weighing up the risk of offering you a loan:

• The amount of equity in your home. This is how much of the property you actually own, i.e. the current market value of the property minus whatever is still owing to your mortgage provider (if you have one).
• Your regular income and outgoings (and those of any co-signatories, if it’s a joint application). This is crucial when determining whether or not the monthly repayments would be affordable for you. Lenders will want to know what debt you’re currently carrying and how much that’s costing you each month. If your reason for seeking a new loan is debt consolidation, then naturally this will be taken into account.
• Your credit history. This is a file kept by credit reference agencies which records your borrowing history. Lenders will be hoping to see that you have a history of using credit responsibly. CCJs are also logged in your credit report.
• What you want the money for – i.e. the loan purpose. Lenders are pretty open-minded when it comes to the loan purpose, but may have a defined list of acceptable purposes or a defined list of unacceptable purposes.
• Some routine eligibility criteria like UK residency (some lenders will specify you must have been a UK resident for a specific amount of time) and your age (both minimum and maximum).

£150,000 loans for the self-employed

Realistically, getting a £150,000 loan can be slightly harder for self-employed people. These individuals are seen as a higher risk for lenders because their income is perceived to be less stable. Still, there are lenders that specialise in homeowner loans for self-employed people. Expect to be asked for a little extra documentation – typically two years’ worth of accounts, SA302s/tax calculations, HMRC tax overview statements and possibly a reference from your accountant as well.

How to get a £150,000 personal loan

1. Work out your budget. Our calculator can help you get an idea of how long a term you’d need to spread the loan over in order to get manageable monthly repayments. As a general rule of thumb, you should aim to clear the loan in as short a time as possible, while ensuring the monthly repayments are affordable. Loans with longer terms tend to come with a variable interest rate (although some secured loans offer an introductory fixed-rate period), so it’s sensible to leave yourself a bit of leeway so that if rates rise, you’ll be able to take it in your stride.
2. Get to know your credit record. Knowing your credit score helps understand what options are available to you. For many lenders, you’ll need a good credit score to get approved for a £150,000 loan. Plenty of companies can help you get free visibility of your credit report that’ll let you know how you’re tracking. If your credit score doesn’t appear to be good enough, consider applying for a smaller loan or building your credit score first and applying at a future date.
3. Shop around or, better still, consider a broker or loan-matching service. It’s generally a bad idea to simply go straight to one lender and apply. You should always compare multiple lenders online and look for the best price for the amount you need. For a loan as big as £150,000 even a slightly better rate can translate into thousands of pounds saved. A decent broker or loan-matching service can take your details and check your eligibility against products from multiple lenders in one go, saving you a lot of time (and hopefully money too). A number of lenders (such as United Trust Bank) actually only offer their loans through brokers.
4. Apply. Perhaps the easiest way to apply for a £150,000 loan is with the help of a good broker. You’ll provide some basic details, agree to a credit check and the indicative result of your application will usually be made available within seconds. Bear in mind you should only ever formally apply for credit when you’re pretty confident you’ll get approved (lenders and brokers can help you to establish this beforehand). Each application for credit usually involves a search of your credit file, which causes a small (and usually short-lived) negative effect on your credit score.

Should I just remortgage?

Remortgaging is a popular strategy for homeowners to get hold of huge lump sums. This involves altering your mortgage deal and borrowing against the equity of your property. If you have a lot of equity or can bag a low mortgage rate, this could prove more economical than a personal loan.

Full guide to remortgaging