Secured loans with bad credit

You should be able to get a secured loan even if you have a bad credit rating. Find out how they work and compare your other credit options.

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The UK's largest range of secured loans

  • Loans from £1,000 to £2,500,000
  • See your quote before you apply
  • Quote won’t affect your credit score
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.

If you’re looking to borrow money but worried that your credit rating may get in the way, a secured loan could be your best option. By using your house as collateral against the loan, you’re more likely to be approved, even if you have bad credit.

If you don’t own a home, you may want to consider a bad credit personal loan.

Compare lenders and rates

Table: sorted by overall cost for comparison (representative APRC)
Data indicated here is updated regularly
Name Product Maximum LTV Loan amounts Loan terms Overall cost for comparison
United Trust Bank Ltd Secured Loan
65%
£125,001 to £500,000
3 to 30 years
6.4% APRC
United Trust Bank Ltd Secured Loan
70%
£125,001 to £500,000
3 to 30 years
6.4% APRC
United Trust Bank Ltd Secured Loan
65%
£10,000 to £125,000
3 to 30 years
7.1% APRC
United Trust Bank Ltd Secured Loan
70%
£10,000 to £125,000
3 to 30 years
7.1% APRC
United Trust Bank Ltd Secured Loan
75%
£125,001 to £250,000
3 to 30 years
7.8% APRC
United Trust Bank Ltd Secured Loan
75%
£10,000 to £125,000
3 to 30 years
8.4% APRC
United Trust Bank Ltd Secured Loan
65%
£125,001 to £500,000
3 to 30 years
8.8% APRC
United Trust Bank Ltd Secured Loan
70%
£125,001 to £500,000
3 to 30 years
8.8% APRC
United Trust Bank Ltd Secured Loan
65%
£10,000 to £125,000
3 to 30 years
9.7% APRC
United Trust Bank Ltd Secured Loan
70%
£10,000 to £125,000
3 to 30 years
9.7% APRC
Equifinance Adverse Secured Loan
60%
£5,000 to £150,000
3 to 25 years
10.2% APRC
United Trust Bank Ltd Secured Loan
75%
£10,000 to £125,000
3 to 30 years
10.5% APRC
Equifinance Adverse Secured Loan
60%
£5,000 to £150,000
3 to 25 years
10.7% 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 secured loan?

A secured loan lets you use your home as collateral against the cost of the loan. Also known as a “homeowner loan” or “second charge mortgage”, a secured loan will also generally offer a more competitive rate than an unsecured loan.

In the event that you fail to repay your loan, the lender can take ownership of the equity you have in your home.

Are secured loans easier to get?

Putting up security can help borrowers with adverse credit to access a wider selection of loans. As well as making it easier to get approved, applying with the back-up of the equity in a home can help applicants to access larger sums and/or lower rates.

Because lenders have the reassurance that they’re less likely to lose their money, your credit rating becomes a less crucial factor in the approval process. What’s still crucial, however, is that you can comfortably afford the monthly repayments.

Will a lender want to check my credit file?

Yes, almost certainly. However many secured loan companies will put less of a focus on your credit score – with some even touting secured loans with “no credit scoring”. In reality this means that the lender will base its decision (at least in part) on your credit history. For example, when it looks at your history of payments in the last 12 months, if you’ve missed one payment that might be fine, but if you’ve missed two you might be declined.

Most lenders can use a “soft search” (a credit check that doesn’t impact your credit score or leave a footprint visible to other lenders) to give you a good idea as to whether or not it’s worth applying.

As with many other types of loan, secured loan interest rates are more often than not tailored to the individual applicant’s circumstances. In other words, if your credit file has taken a few bumps along the road, you might be offered a slightly higher rate than the lender’s marketed rates.

Can I use another asset as security?

In theory yes, you may be able to use another form of collateral with certain secured loans. However, many lenders will only consider customers looking to use the equity in their house as security.

Pros and cons

Pros

  • More likely to be approved. If you have bad credit, you may find it hard to be approved for an unsecured loan. By using an asset as collateral, you reduce the level of risk and improve your chances of getting a loan.
  • More competitive rate. A secured loan will likely have a much lower rate than an unsecured loan, especially for someone with bad credit.
  • Better loan terms. Compared with an unsecured personal loan, you can generally get longer loan periods and higher maximum loan amounts.

Cons

  • Higher risk. If you fail to repay your secured loan, you may lose the equity you have in your house, or even lose the house itself. You’ll also likely make your credit score even worse.
  • Must have equity in your house. Secured loans require you to have an asset to use as security, and this is almost always your house. If you don’t have equity in your house, you generally won’t be able to apply for a secured loan.
  • Loan size may be limited. The loan amount will be limited to the amount of equity you have in your house. If you only have a small amount of equity, it’s unlikely you’ll be able to get a large loan.

Am I eligible for a secured loan?

As with any loan, there are a number of eligibility criteria you will need to meet in order to be considered for a loan. Criteria vary from lender to lender, but as an absolute minimum you’ll need to be:

  • At least 18 years old
  • A UK resident
  • A homeowner with a mortgage

What are my other options?

If you don’t qualify for a secured loan or don’t want to use the equity in your house, you still have a couple of other options:

Unsecured loans with bad credit. You may be able to get an unsecured loan with bad credit, but you will likely receive a much higher rate. The maximum amount you can borrow will also be much lower than on a secured loan.

Guarantor loan. By using a friend or family member as a guarantor on your loan, you’ll be able to reduce the risk you represent to the lender, which means you are more likely to be approved for a loan.

Credit builder credit cards. One way to improve your credit score is by using a credit-building credit card. If you can show a credit provider that you can responsibly manage your credit account, you’ll be able to improve your credit and make yourself more likely to be approved for a loan.

Frequently asked questions

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