Long-term loans

Long-term loans, typically 1-35 years, can help reduce the size of your monthly repayments and give you more time to pay off your loan.

The UK's largest range of secured loans

  • Loans from £1,000 to £2,500,000
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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.

Compare long-term loans

Table: sorted by overall cost for comparison (representative APRC)
Name Product Maximum LTV Loan amounts Loan terms Overall cost for comparison
Paragon Personal Finance Prime Rate Secured Loan
65%
£30,000 to £500,000
10 to 30 years
3.6% APRC
Paragon Personal Finance Prime Rate Secured Loan
60%
£100,000 to £500,000
10 to 30 years
3.6% APRC
Paragon Personal Finance Prime Rate Secured Loan
60%
£100,000 to £500,000
10 to 30 years
3.8% APRC
Paragon Personal Finance Prime Rate Secured Loan
70%
£30,000 to £500,000
10 to 30 years
3.8% APRC
Paragon Personal Finance Prime Rate Secured Loan
65%
£30,000 to £500,000
10 to 30 years
3.8% APRC
Paragon Personal Finance Prime Rate Secured Loan
70%
£30,000 to £500,000
10 to 30 years
4% APRC
Paragon Personal Finance Prime Rate Secured Loan
75%
£20,000 to £250,000
5 to 25 years
4.3% APRC
United Trust Bank Ltd Secured Loan
65%
£125,001 to £500,000
3 to 30 years
4.3% APRC
United Trust Bank Ltd Secured Loan
65%
£125,001 to £500,000
3 to 30 years
4.4% APRC
Paragon Personal Finance Prime Rate Secured Loan
75%
£20,000 to £250,000
5 to 25 years
4.5% APRC
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Overall representative example
If you borrowed £35,000 over a 14-year term at 8.95% p.a. (variable), you would make 168 monthly payments of £418.88 and pay £70,371.84 overall, which includes interest of £30,326.84, a broker fee of £3,550.00 and a lender fee of £995.00. The overall cost for comparison is 11.8% APRC representative.

What is a long-term loan?

A long-term loan is any loan product that’s designed to be paid off over more than five years, which is the standard limit for regular personal loans. While there are some unsecured loans that offer terms of up to 10 years, long-term loans generally refer to secured loans, which are a type of personal loan that uses your home equity as collateral against the cost of the loan.

How does a long-term loan work?

A long-term loan works much like any other personal loan but is repaid over a longer period of time, which is generally anywhere from 10-30 years. Most long-term loans are offered as secured or homeowner loans, which means your house is used as security against the loan and could be repossessed if you fail to make your repayments.

The main benefit of a long-term loan is that the cost of the loan is split over a longer period, which can make it more affordable for those on a strict budget. However, while your monthly payments will be smaller, you may still end up paying more over the life of the loan.

Short term vs long-term loans

Long-term loans are generally offered with lower rates than short-term loans, and your monthly repayments will likely be more manageable. But the key difference between short-term and long-term loans is that long-term loans offer smaller repayments, while short-term loans cost less overall.

You can compare the cost of short-term and long-term loans in the example below:

Loan amountLoan termAPRMonthly repaymentsTotal cost of loan
£30,0007 years6% (fixed)£436£36,622
£30,00020 years6% (fixed)£212£50,925

As you can see from this example, a shorter-term loan costs less overall than a long-term loan for the same amount, but the long-term loan offers lower monthly payments. When choosing between a short-term or long-term loan, it’s important that you understand the potential overall cost, as well as how much you can afford to repay each month.

What are the pros and cons of long-term loans?

Pros

  • Smaller repayments. The lower the size of your monthly repayments, the more manageable the loan is likely to be as the cost of the loan is split over more instalments. This can make long-term loans more attractive for those looking to spread the cost of a large expense over a number of years.
  • Lower interest rate. As secured loans represent less risk to the lender compared with other types of loan, you’ll generally receive a more competitive rate.
  • More flexibility. Long-term secured loans generally offer an additional repayment option, which means you can pay off your loan more quickly and save on interest. The smaller size of repayments on a long-term loan will also let you free up cash for other purposes.
  • More likely to be approved. You’ll generally have a better chance of getting a secured loan than you would an unsecured loan because of the associated risk for the lender.

Cons

  • You’ll pay more in interest. The main disadvantage of a long loan term is that the overall cost of the loan will be higher, as you’ll be paying interest over a longer period of time. Depending on the size and length of your loan, this could mean your loan ends up being much more expensive than the equivalent shorter-term loan.
  • Your equity is at risk. A secured loan requires you to use an existing asset as collateral, and this asset can be forfeited if you then fail to repay the loan.
  • Not available to everyone. If you don’t have equity in your home or are unwilling to use it as security, you won’t be eligible for a secured, long-term loan.
  • Limited options. Most lenders only offer personal loans of up to five years. If you want a secured or long-term loan, it’s likely you’ll have to apply with a specialist lender.

Can you get a long-term payday loan?

No, short-term or payday loans are only offered with limited loan terms, generally anywhere from one week up to six months, and should be paid back as soon as possible. The longer it takes you to repay your short-term loan, the more expensive it will be.

Am I eligible for a long-term loan?

You’ll need to be a homeowner to be eligible for most long-term loans, as they are generally offered as secured loans, which require you to use your home as security against the cost of the loan. While many lenders offer unsecured personal loans with longer loan periods, you’re likely to need good credit history to be eligible for those loans.

How to apply for a long-term loan

To apply for a long-term loan, you’ll generally need to contact a specialised secured loan broker or lender who will be able to better explain your loan options and your chances of getting approved. When you apply for a secured long-term loan, you’ll also need to arrange for a valuation of your home, but your broker or lender can help you organise this.

As with any other loan, you’ll need to provide the following information when applying for a long-term loan:

  • Your name and contact information
  • Proof of income
  • Employment status

If you’re applying for a secured long-term loan, you’ll also need to provide proof of ownership of your house.

Is it possible to get long-term loans for bad credit?

A secured long-term loan may be a suitable option if you have a poor credit rating. You’ll be considered a higher risk than someone with a good credit rating, so using security against your loan can help mitigate that risk for the lender, meaning you have a better chance of being approved.

As a longer loan term also reduces the size of your monthly payments, lenders may think you’ll be more likely to pay off the loan on time, which could also help your chance of approval. However, this may also work against you, as a longer loan term means there’s more time for your financial situation to change, and therefore more risk that you could default on the loan.

If you have bad credit, you’re also unlikely to get a competitive rate, which is one of the major benefits of a secured, long-term loan.

Do I need a guarantor for a long-term loan?

No, you won’t necessarily need a guarantor to apply for a long-term loan, especially if you’re a homeowner looking to use your house as collateral against the loan. If you’re applying for a longer-term unsecured loan, having a guarantor may improve your chances of getting approved, but it’s likely you’ll need to also have a good credit score to be eligible.

Can I repay a long-term loan early?

Yes, most lenders will let you repay your long-term loan early, but it’s worth checking with a specific lender if this is the case before you apply for your loan. You may also need to pay an early settlement fee if you repay your loan early, which will vary depending on the size of your loan and how much you have left to pay off.

Can long-term loans improve my credit rating?

Yes, as with any form of loan or credit, taking out a long-term loan can help improve your credit score provided you make your monthly repayments on time. If you can successfully pay off a long-term loan, you’ll be able to demonstrate that you’re a responsible borrower, which can be reflected on your credit score.

However, if you fail to make the repayments on your long-term loan, you may end up damaging your credit rating, which can make it harder for you to get another loan in the future.

What are my other long-term loan options?

Long-term personal loan. Most lenders provide personal loans with terms of 1 to 5 years, but there are some unsecured personal loans that have terms of 10 years. However, this option may only be available to borrowers with good credit history, and you’ll have to check with specific lenders to check your eligibility.

Credit card. You could also consider applying for a credit card, which offers ongoing access to an agreed credit limit. As long as your account remains open and you meet the minimum monthly repayment, you’ll be able to continue using your line of credit for as long as you need. Some credit card providers also offer extended interest-free periods, meaning you won’t have to pay any interest on the credit you use for up to two years.

Frequently asked questions

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