Compare secured loans

Use the equity in your property to access more competitive rates and better loan terms.

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Name Product Maximum LTV Loan amounts Loan terms Overall cost for comparison Repayments
Paragon Personal Finance Prime Rate Secured Loan
65%
£30,000 to £500,000
10 to 30 years
3.6% APRC
£452.65
(£59,749.44 overall)
United Trust Bank Ltd Secured Loan
65%
£125,001 to £500,000
3 to 30 years
4.3% APRC
Not available for requested amount/term
Evolution Adverse Secured Loan
65%
£10,000 to £500,000
3 to 25 years
4.5% APRC
£466.97
(£61,640.54 overall)
Shawbrook Fixed Secured Loan
65%
£10,000 to £500,000
3 to 25 years
4.7% APRC
£471.75
(£62,271.54 overall)
Masthaven Bank Flexible Secured Loan
70%
£10,000 to £150,000
3 to 35 years
4.9% APRC
£468.58
(£61,852.82 overall)
Optimum Credit Prime Rate Secured Loan
50%
£7,500 to £200,000
3 to 30 years
5.1% APRC
£475.78
(£62,803.49 overall)
Equifinance Standard Secured Loan
60%
£5,000 to £150,000
3 to 25 years
9.5% APRC
£578.76
(£76,396.86 overall)
Norton Fast Track Secured Loan
75%
£3,000 to £100,000
1 to 25 years
10.1% APRC
£569.56
(£75,181.91 overall)
Equifinance Adverse Secured Loan
60%
£5,000 to £150,000
3 to 25 years
10.2% APRC
£595.16
(£78,561.54 overall)
Clearly Loans Exclusive Secured Loan
75%
£5,000 to £100,000
4 to 20 years
10.7% APRC
£583.95
(£77,080.9 overall)
Clearly Loans Exclusive High LTV Secured Loan
80%
£5,000 to £100,000
4 to 20 years
11.6% APRC
£604.47
(£79,789.6 overall)
Norton Standard Secured Loan
75%
£3,000 to £55,000
1 to 25 years
12.3% APRC
£610.36
(£80,567.7 overall)
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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 are secured loans?

Loans secured against a property, also known as homeowner loans or second-charge mortgages, allow homeowners with a mortgage to use the equity in their home as security to borrow larger amounts (over £10,000) or to borrow at more competitive rates.

There’s a little extra admin involved – like verifying the value of the property and the extent of any other borrowing secured against it – which can eat into lenders’ margins, making smaller loans less appealing. The process takes a little longer than an unsecured loan (perhaps a few weeks rather than a few days) but since there usually aren’t solicitors involved, it’s still typically faster than a regular mortgage would be. No offence, solicitors.

Pros and cons of homeowner loans

  • Because the security you put forward reduces the risk to the lender, you may be able to borrow larger sums.
  • Similarly, you may be able to spread repayments over longer terms.
  • You could access a better rate by providing security.
  • A good broker can guide you through the process.
  • Longer turnaround time than many other forms of borrowing.
  • There are usually fees involved.
  • Despite better rates, repaying over a longer term could make for a more expensive loan overall.
  • Your home is on the line.

Am I eligible for a secured loan?

To be eligible for a secured loan, you’ll need to own enough equity in your house to cover the cost of the loan. For example, if you wish to borrow £10,000, you’ll need to have at least £10,000 of equity in your house to use as security against the loan amount.

As with any other loan product in the UK, you’ll also need to meet the following criteria to be eligible for a secured loan:

  • Be at least 18 years old
  • Be a UK resident

How do secured loans work?

With a secured loan, you put up a personal asset as collateral – it could be a car, a boat, a collection of Star Wars memorabilia… but most commonly it’s a property.

If there’s already a mortgage on that property (which in itself is probably the most common form of secured lending), then an additional loan against the property has what’s known as a “second charge” over it. In other words, that lender would be next in line (after the main mortgage provider) to recoup its losses from the sale of the property.

Whatever asset you use as security, it stands to be repossessed if you fall behind on the loan repayments – that’s why you’ll always see/hear/read the standard “Your home is at risk if you do not keep up repayments…” warning on adverts for loans involving security. Repossessed assets are then usually sold off by the lender, enabling them to recoup their losses. If there’s any money left over once the lenders expenses have been covered, it’ll be returned to the borrower. Needless to say, as well as putting your home at risk, defaulting on a secured loan will hurt your credit score pretty badly – making it harder and more expensive to get loans in the future.

When you’re comparing loans, you might see the term “homeowner loan” cropping up, but it can be misleading. Some types of loan can be cheaper if the borrower is a homeowner, but that doesn’t necessarily mean that the loan is secured against the home. Before you take out any loan, make sure you understand what security’s involved. In this guide, we’re focusing on loans that are secured against your house.

Secured loans are perhaps most popular with those looking to consolidate debt, but can also be a way to access funds without disrupting an existing mortgage – perhaps for people enjoying a very low fixed rate or people whose credit rating has been severely damaged since taking out their mortgage.

The big banks don’t dominate the secured loans market (perhaps because they’re more interested in larger, traditional mortgages), instead you’ll see a large number of specialist lenders that are less likely to be household names – Optimum Credit is perhaps the largest of these.

How does the valuation process work?

When considering your secured loan application, the lender will want to confirm that you do in fact own the right amount of equity in your house, as well as the overall ownership situation. Just as importantly, the lender will want to make sure that the equity you’ve listed on your application has the correct market value.

To do this, the lender will often appoint a surveyor to inspect the property and determine its value based on factors like its location, condition and quality, as well as current market conditions. This valuation may not match up with your own valuation of the property, or indeed the amount you paid to purchase the house.

How to compare homeowner loans

Here are some of the key factors to bear in mind:

  • Total cost. The most important factor to consider when comparing almost any loan is the total cost. The APRC (which all lenders must calculate in the same way) is a good benchmark for what a loan will cost you each year – taking into account both interest and any mandatory fees, but the overall cost is an even better metric. That’s because if you borrow at a low interest rate, but you borrow for a long time, it can still work out very expensive. Don’t forget, however, that interest rates change over time, unless they’re “fixed”. As such, if your loan is based on a “variable” rate (which is normal for longer-term loans), the overall cost is subject to change. Unfortunately, hefty fees are the norm in the world of secured loans, with product fees of anywhere up to 10% of the amount being borrowed.
  • Amounts and terms available. The longer the term length, the lower your monthly repayments will be. However, the total cost of your loan will be more as you’re paying interest for longer. Choose the shortest term length you can, with monthly repayments that are affordable for you. Most lenders offer terms of up to 25 years, although some will stretch to 30 years.
  • Flexibility. Can you repay the loan early? Is there a penalty for doing so? Will it save you money in interest? Each lender will have its own policy covering facilities like early repayment and even repayment holidays. Most lenders do charge an early redemption fee of some sort, but it could be a flat fee or a percentage-based fee (or, worse still, both).
  • Eligibility. Before you apply check the lender’s minimum criteria, which could include factors like age, residency, employment and income.

How to apply for a secured loan

If you’re looking to get a secured loan, you’ll first need to ensure you have enough equity in your home to cover the amount of money you want to borrow. Once you’ve confirmed that this is the case, you can apply for a secured loan by following these steps:

  1. Compare a range of lenders. When looking for a secured loan, make sure you compare a number of providers and loans to find the one that best suits your needs. Always confirm that a certain loan will let you borrow as much as you need and that it offers a competitive interest rate. You may also want to consider if a lender offers additional repayment options, such as the ability to pay off the loan early.
  2. Check your eligibility. Once you’ve chosen a secured loan, make sure you meet the lender’s specific eligibility criteria.
  3. Apply for the loan. Depending on the lender, you can generally apply for a secured loan online or by phone. You’ll need to provide certain personal details and financial information as part of your application.
  4. Wait for the lender’s checks. Once you’ve applied for a secured loan, the lender will need to check your credit history and verify the ownership of your property, as well as its market value. This process generally takes a couple of weeks.
  5. Sign the loan paperwork. Once you’re approved for a loan, the lender will send any relevant documents you’ll need to sign. Once you’ve done so, the lender will transfer the funds to you.

What is APRC?

Like many other forms of mortgage, a secured loan might come with an introductory fixed-rate period – say, 3.5% for two years, which then reverts to a variable rate. This, combined with product fees, can make it hard to put two secured loans side-by-side and know which is the better deal.

The APRC (annual percentage rate of charge) is designed to offer consumers a benchmark annual cost over the lifetime of the loan, taking into account the interest rates and periods plus any fees involved.

Just to add an extra layer of complication, lenders normally tailor rates to the applicant. In other words, if they think you’re a higher risk, they might offer you a higher rate. A “representative” APRC is the APRC that at least 51% of customers are offered for a given product.

Another useful benchmark (and one that can be easier to get your head around) is the total cost of borrowing. This should be at, or near, the top of your list of factors for comparing homeowner loans.

Alternatives to secured loans

For a large loan, you’ll generally need to provide security in the form of a valuable asset. But if you’re looking to improve your odds of being approved for a good deal on a smaller loan and don’t want to put assets up as collateral, then options to consider include:

  • Remortgaging. You may wish to consider restructuring your mortgage, rather than running a second consecutive mortgage alongside it. Unless you’re locked into a great fixed-term rate or your credit score has taken a hit, it’s usually smart to remortgage every few years anyway.
    Remortgaging
  • Equity release. If you’re over 55 and a homeowner you may wish to consider exploring an equity release scheme, such as a lifetime mortgage, as a means to access the funds tied up in your house.
    Equity release
  • Guarantor loans. With guarantor loans, you must find an individual who agrees to take on your debts if you can’t repay them on your own. This added security make lenders feel more comfortable approving less creditworthy borrowers.
    Guarantor personal loans
  • Credit cards. Each provider will have different lending criteria for each card. You may find you have more luck being approved for a small loan on a credit card.
    Credit-builder credit cards
  • Unsecured personal loans. To get good rates on an unsecured personal loan without a guarantor, you’ll usually need good credit.
    Unsecured personal loans

Bottom line

Secured loans can be a useful option when you need to borrow larger sums in a relatively short space of time. They give lenders the reassurance needed to approve larger loans and loans to people with less-than-perfect credit ratings. Before applying for a secured loan, consider whether you’re willing to take the risk of having your assets repossessed.

Frequently asked questions

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.

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