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A secured loan lets you use the equity in your home to get better rates and loan terms, but how long does it take to be approved?
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Table: sorted by overall cost for comparison (representative APRC)
Updated April 9th, 2020
Overall representative example
If you borrowed £41,000.00 over a 14-year term at 8.89% p.a. (variable), you would make 168 monthly payments of £479.45 and pay £80,547.60 overall, which includes interest of £34,557.60, a broker fee of £3,995.00 and a lender fee of £995.00. The overall cost for comparison is 11.6% APRC representative.
If you borrowed £41,000.00 over a 14-year term at 8.89% p.a. (variable), you would make 168 monthly payments of £479.45 and pay £80,547.60 overall, which includes interest of £34,557.60, a broker fee of £3,995.00 and a lender fee of £995.00. The overall cost for comparison is 11.6% APRC representative.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.
How fast can I get a secured loan?
The secured loan process is generally slower than it is for an unsecured personal loan, and it will often take anywhere from three to six weeks to be approved for a secured loan. However, you can still apply for a secured loan within a couple of a minutes, and loan approval times will vary between different lenders.
This is due to the fact that you’ll be using your house as security against the loan, which means the lender will need to both verify the ownership situation and take out a valuation of the property. These steps are in addition to the normal personal loan application process, during which lenders need to verify your identity and check your credit history and financial situation.
What are the benefits of a secured loan?
While it can take longer to get a secured loan than an unsecured personal loan, there are potential advantages offered by a secured loan:
- Competitive rates. As a secured loan represents less risk than a normal personal loan, you’ll generally be offered a lower interest rate than you would on an unsecured loan.
- Larger loan amounts. Depending on your credit history and financial situation, you may find it hard to be approved for an unsecured personal loan, especially for loan amounts over £10,000. If you’re looking to borrow a large sum of money, a secured loan may be the most suitable option.
- Longer loan terms. You can get a loan term up to 30 years with a secured loan, which can help reduce the size of your loan repayments. Keep in mind that the longer your loan term, the more you’ll pay in interest over the life of the loan.
Can I get a fast secured loan with bad credit?
Yes, you’re still eligible for a secured loan if you have bad credit, and you’re much more likely to be approved than you would be with an unsecured loan. When deciding whether to approve a loan application, lenders are mainly concerned with the level of risk associated with the loan. This refers to the likelihood that the applicant will be able to pay off the loan on time.
Someone with bad credit will be considered a higher risk than someone with good credit, as their history suggests they may have struggled with paying off debts in a responsible and timely manner. With a secured loan, the lender can take ownership of the home equity you’ve used as security in the event you fail to repay your loan. As a result, the loan is considered less of a financial risk for the lender, meaning you’re more likely to get approved.
What are the alternatives to secured loans?
If you’re looking to get quicker access to funds, you could consider the following:
- Unsecured personal loans. If you don’t have any home equity in a property, or are looking to borrow a smaller amount, you may want to consider an unsecured personal loan. You can generally be approved for an unsecured loan within a couple of days, though some lenders may even approve your application on the same day.
- Short-term loans. If you need quick access to money, a payday loan can be approved and funded in as little as 15 minutes. However, you’ll be limited in how much you can borrow, and will also be charged a much higher interest rate. Short-term loans are the most expensive type of loan, and can often lead to financial difficulty.
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