An £80,000 personal loan might sound like an incredible amount to borrow, but there are lenders who frequently offer such loans, under specific circumstances. You’ll only be able to borrow this amount with a loan secured against a property you own. The lender will be able to repossess your home if you fall too far behind on repayments.
Your ability to be approved for an £80,000 loan will largely depend on your income/outgoings, the amount of equity you’ve built up in your property, your credit profile, and some basic eligibility criteria like age, residency and employment status. Lenders will check your bank statements and employment information to ensure you can comfortably afford the monthly repayments, so a consistent income and low amounts of existing debt will help your case.
You can use an £80,000 loan for a range of purposes, including:
The size of loan payments will depend on the interest rate you receive and the length of your loan. For example, an £80,000 loan with a 10-year term and fixed 7% rate could have monthly payments of £928.27, while an £80k loan with a 20-year term and 9% annual rate will cost £719.78 each month. You can calculate your loan costs here.
| 4% p.a. interest | 7% p.a. interest | 10% p.a. interest | |
|---|---|---|---|
| 8-year loan | £975 | £1,091 | £1,214 |
| 10-year loan | £810 | £929 | £1,057 |
| 12-year loan | £700 | £823 | £956 |
| 15-year loan | £592 | £719 | £860 |
| 20-year loan | £485 | £620 | £772 |
| 25-year loan | £422 | £565 | £727 |
| 3% p.a. interest | 5% p.a. interest | 8% p.a. interest | |
|---|---|---|---|
| 8 years | £90,083 | £97,228 | £108,570 |
| 10 years | £92,698 | £101,823 | £116,474 |
| 12 years | £95,361 | £106,547 | £124,699 |
| 15 years | £99,444 | £113,874 | £137,614 |
| 20 years | £106,483 | £126,712 | £160,596 |
| 25 years | £113,811 | £140,302 | £185,236 |
A personal loan secured against your property works very similarly to a second mortgage, although there are no conveyancers involved. To approve your loan, the lender will need to conduct an evaluation of your finances and the property you’re using as collateral.
After you’ve applied for the loan, the lender will typically conduct a telephone interview to get a better idea of your financial situation.
If you meet the lending criteria, you’ll be issued a formal offer, subject to a valuation of your property. The valuation will usually require an official property inspection and you may need to get permission from your mortgage lender.
If all is well and good, you can expect the money to be transferred into your bank account shortly after. The entire application process typically takes around three weeks to complete.
It’s worth taking your time to compare all the personal loan offers across the market using a comparison website.
When you’re borrowing an amount as significant as £80,000 over a long period of time, the slightest improvement in interest could make a significant difference to your bank account.
The advertised interest rate is not all you need to think about, though. Here’s a full list of factors to consider:
If you’re a homeowner (with or without a mortgage) and you’ve built up more than £80,000 of equity in your property, then you should also consider remortgaging. The process typically takes around 4-8 weeks.
Much like a secured loan, remortgaging is likely to involve sizeable fees, although they are typically lower. These can usually be bundled in with the loan. A remortgage may work out more cost-effective than a personal loan, especially with current mortgage rates low across the board.
For many, the prospect of a single mortgage secured against their home will appeal. However, deciding which option is right for you can get fiddly and will probably require a calculator!
Banks reserve their best interest rates for low-LTV (that’s your loan-to-value ratio) applications. So if you currently have a £90,000 mortgage outstanding on a £200,000 house, then you have an attractively low LTV of 45%. Your bank probably loves customers like you, and so you might be enjoying a low rate of, say, 1%. But add £80,000 additional borrowing on top of this, and your LTV rises to 85%. An 85% LTV is riskier for a lender, and as such it would likely offer you a higher interest rate across your whole mortgage balance – not just the additional £80,000 borrowing.
Similarly, if your credit score has taken any knocks since you bagged a favourable mortgage rate, or if interest rates generally have risen, then you may find that you’re now being offered only higher rates than you’re used to, and you may not want these to apply to all your borrowing.
To ensure you get the best deal, compare the total financial impact of remortgaging to that of a secured loan to see which is the better option for you. Factor in how quickly you hope to be able to pay off the £80,000, and check out the early repayment conditions of any loan or mortgage before you take it out.
Read our full guide to remortgaging
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