How to get a £40,000 loan with the best rate

The loan estimates above use approximate, rounded figures, that are calculated using a flat interest rate. Many secured loans offer variable interest rates, which means your rate can change during the course of your loan, and you may end up paying more, or less, in interest.

Are there any fees on a £40,000 loan?

This will depend on the type of loan you take out, as well as your specific lender or broker. If you’re applying for a secured £40,000 loan, then yes – you will need to pay some fees as part of your application, such as a lender’s fee or application fee, as well as a valuation fee to determine the value of your property. Typically, the fees are bundled in with the loan and paid off over the same timeframe.

What can I use a £40,000 loan for?

You can get a £40,000 loan for any legitimate purpose, and loans are often used for the following purposes:

• Home improvements
• Buy a car
• Capital for small business
• Purchase land
• Student loan

What do I need to apply for a £40,000 homeowner loan?

To qualify for a £40,000 homeowner loan, you’ll first need to own some or all of the equity in your house, which can then be used as security against the cost of the loan. Like any other loan, you’ll also need to provide personal information and documents including:

• Your name and address
• Proof of income
• Proof of homeownership

Some lenders may also require you to meet certain other criteria to be eligible for a loan, such as a minimum income or credit rating. While you might not need an excellent credit score to qualify for a secured homeowner loan, the better your credit rating, the more likely you are to be approved, and the better loan terms you’re likely to get.

How long does it take to get a £40,000 loan?

An unsecured loan can – in theory – be in your account the same day, but when you’re asking for £40,000, it’s likely to get a little more scrutiny from underwriters and as such will usually take a couple of working days.

A secured loan realistically takes a little longer, as there are a few extra steps involved. A valuation of the property is required, although this is unlikely to involve a valuer actually entering the property. The bank that’s currently providing your mortgage (the “first charge” on the property) will also need to be asked to give its consent.

Factors such as these mean that arranging a secured loan can take weeks rather than days, but for many, access to lower rates and/or larger sums make this a worthwhile trade-off.

What credit score do I need for a £40,000 loan?

If you’re applying for an unsecured personal loan of £40,000, it’s very likely you’ll need to have an excellent credit score. Different credit reference agencies use different scoring systems, but for Experian an Excellent score is 961 or higher.

However your credit score is just one factor on which your application will be assessed – the affordability of repayments is just as (if not more) important.

If your credit rating isn’t excellent and you’re leveraging the equity in your home as security, your credit score can become a less crucial factor (however it does remain a factor). The importance given to your credit score will vary from lender to lender and some lenders specifically aim to help borrowers who don’t have great credit.

How long does it take to pay off a £40,000 loan?

The loan term can be adjusted to make the monthly repayments more affordable – a longer loan normally means 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 6%, a £40,000 loan would take around eight and a half years to repay if your monthly repayment was £500. If you wanted to keep the monthly cost down however, and paid £400 each month, it would take around 11 and a half years.

Can I pay off a £40,000 loan early?

Yes, most lenders will let you pay off your £40,000 loan early, but many will charge you an early settlement fee to do so. This amount will vary based on both the size of your loan, and how much you still need to pay off, but will normally be an amount equal to up to 58 days of interest.

How to get a £40,000 loan

• Calculate how much you can realistically afford to pay each month. This will help you get an idea of how long a term you’ll need to spread repayment over. As a general rule of thumb, the longer the loan the greater the overall cost but the lower the monthly repayments. Our £40,000 loan calculator can help you to understand what might be manageable.
• Use a credit report checking service to get to know your credit file. Credit-checking services, such as those provided by the likes of TransUnion (formerly Callcredit), Experian and Equifax, will give you a score based on your credit rating. You’ll need a good credit score to be accepted for an unsecured £40,000 loan. If you don’t have this, then it’s a good idea to either build your score before applying or approach a specialist lender for borrowers with bad credit. After all, each credit application will harm your credit score (albeit only slightly) even further.
• Compare lenders online. Make sure you shop around and look for the best price for the amount you need.
• Apply. Applying for a £40,000 loan online only takes a few minutes and the money could be in your bank account within hours if you’re deemed eligible for it. You’ll need your personal and financial details to hand, and to be willing to go through an online credit check.

It could also be worth exploring whether you have to borrow 100% of the capital needed for your purchase, or if there are other ways to raise a percentage of the funds. The less money you borrow, the less interest costs you’ll face over the term of the loan. You might even be able to access a better rate too.