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There are plenty of companies willing to lend £200,000 to suitable applicants. They’ll be looking for homeowners with enough equity in their property to secure the loan against. They’ll also want to see that you’re able to afford the repayments on a £200,000 loan.
While your credit record won’t be the be-all-and-end-all, lenders will take it into consideration. If you have bad credit it’ll likely affect the interest rate you’re offered.
You can use a £200,000 loan for a range of purposes, including:
This depends on the loan’s maximum allowable “LTV” (loan-to-value ratio).
For example, if your house was worth £500,000, and you had £200,000 still owing on your mortgage, a homeowner loan specifying a maximum LTV of 80% could allow you to borrow an additional £200,000.
Each loan application is considered on its own merit though, so having sufficient equity doesn’t guarantee approval. But alongside being able to afford the repayment schedule, having sufficient equity gives you a much better chance of getting your application for a £200,000 loan across the line.
The loan tables below 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. If the rate rises during the course of the loan, the monthly and overall costs will increase. Interest rates are low compared to historical averages but the Bank of England are currently raising rates to fight inflation.
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You’ll need to have a stable monthly income to cover the monthly repayments. The monthly repayments themselves will be dictated by the length of the loan (generally speaking, the longer the loan, the lower the monthly repayments), the interest rate you’re offered and any product or broker fees that might be bundled in with the amount borrowed.
Homeowner loans tend to involve relatively long loan terms, and as such, lenders are usually not willing to fix interest rates beyond an introductory period lasting one to five years. It’s crucial to note that where variable interest rates are involved, your monthly repayment could go up. Both you and any potential lender will want to be confident that your income should be able to cope with an increase in that monthly repayment figure.
Ultimately your income is just one important part of the picture on which a lender will assess your case.
Loan companies might specify a minimum income requirement in their basic lending criteria (example below), but meeting these entry-level criteria means that your application can be assessed for approval, not that approval is guaranteed.
When you use the equity in your home as security, your credit score becomes a less crucial factor – but it remains a factor. The importance given to your credit score can vary from lender to lender (with some lenders specifically aiming to serve those with bad credit) but broadly speaking, if you have a lower credit score, you’re likely to be offered a higher interest rate.
Secured loans can take two to three weeks to arrange and drawdown. Although there aren’t solicitors involved, a property valuation will be required and if there’s an existing charge over the property, the first charge holder will need to give its approval.
These extra steps make secured loans a little slower than some other forms of borrowing, but the trade-off can be access to lower rates and/or larger sums.
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 3.0%, a £200,000 loan would take over 18 years to repay if your monthly repayment was £1,200. If you wanted to keep the monthly costs down, and paid £900 each month, it would take more than 27 years.
Here are some of the key factors that will matter to a would-be lender weighing up your application:
It’s a valid option. Remortgaging is a popular strategy for homeowners to get hold of huge lump sums. It involves altering your mortgage deal and borrowing more against the equity of your property. If you’ve got a lot of equity and can bag a low mortgage rate, this could prove more economical than a specialist secured personal loan.
If you fixed your mortgage a while ago and rates have risen since, it unfortunately won’t be possible to simply “top-up” your mortgage borrowing at the same rate. However, you can still talk to your mortgage provider about running a second mortgage alongside the first, at a different rate. Many of the big UK banks (including Lloyds, Halifax and NatWest) offer this option, but it’s still worth comparing specialist secured loan providers (such as those in the table above) alongside your mortage provider to make sure you get the best rate available to you.
If you’re considering applying for a £150,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.
If you’re considering applying for a £100,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.
Short term secured loans let you borrow up to £2.5 million with more competitive rates but also help keep your overall interest costs down.
Find out how fast you can get approved for a secured loan, and compare a range of secured loan quotes now.
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