How to get an £80,000 personal loan with the best rate

Can I get an £80,000 loan?

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.

What can I use an £80,000 loan for?

You can use an £80,000 loan for a range of purposes, including:

• Bridging loan. This type of loan “bridges” the gap for homeowners looking to buy a new home without having sold their existing home or who otherwise need to cover a property purchase without a mortgage.
• Business loan. If you own a business you could take out a loan to cover business expenses and costs, such as the purchase of new equipment.
• Land loan. A land loan can be used to cover the cost of land that you want to develop or where you’re ineligible for a mortgage.
• Home improvements. A secured loan can be used to cover the cost of improvements you want to make to your home.
• Debt consolidation. If you have large existing debts, you could take out a loan to pay them off and consolidate them into one debt.

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.

How do I compare lenders?

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:

• Lending criteria. A lender will usually publish its basic eligibility criteria online. You may also find criteria for specific loans. This could include details of expected minimum income, employment type or minimum equity in your property, among other things. Check to see if you meet these criteria before applying for a loan.
• Rate. The loan’s “representative APR” will be advertised. This is the rate that has to be offered to at least 51% of customers. If you’re deemed a particularly risky applicant, you may be offered a rate that’s higher than this.
• Term length. This is the number of months you’ll spend repaying the loan. A loan with a longer term may have lower monthly repayments, but you’ll pay more overall due to extra interest charges.
• Arrangement fees. Some personal loans include one-off fees paid at the start of the term, although this is rare nowadays.
• Total payable. The total amount paid over the term of the loan. This is the most important factor to consider.

Should I just remortgage?

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

Frequently asked questions

• What can I use an £80,000 personal loan for?

  Lenders rarely set official boundaries on what a personal loan can be spent on. However, they’ll usually ask what you plan to use the money for and they may use your answer as part of your eligibility assessment. If you’re using the money for a long-term investment such as debt consolidation or home improvement, you may be more likely to be approved for a loan.

• How long will the loan term be?

  You may be able to choose your desired term, although each lender will offer a minimum and maximum length based on your personal circumstances. You can typically expect to be offered a term of between 10 and 20 years.

• Can I get an £80,000 loan with bad credit?

  Potentially, yes. Having bad credit may reduce the selection of lenders who will offer you a loan, and you may be offered higher interest rates. However, because secured £80,000 loans offer the lender the reassurance that the home is always there to help them recoup their losses in the event that you fail to repay, your credit rating is less of a factor than it would be with an unsecured loan.

• Can I get an unsecured £80,000 loan?

  Alas, no. Most lenders cap their unsecured lending at £25,000, although a few stretch to £50,000.