To use our free secured loans calculator, enter your property’s equity to unlock competitive rates and preferable loan terms.
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We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Overall representative example If you borrow £43,000 over 16 years at a rate of 10.25% variable, you will pay 192 instalments of £505.18 per month and a total amount payable of £96,994.56. This includes the net loan, interest of £49,404.56, a broker fee of £3,995 and a lender fee of £595. The overall cost for comparison is 12.7% APRC variable.
What is a secured loan?
Also known as a homeowner loan or a second-charge mortgage, a secured loan uses the equity in your home as collateral, which usually allows you to borrow larger amounts at more competitive rates or preferable loan terms.
The personal asset you choose to secure your loan against doesn’t necessarily have to be your property, but more often than not, this is the case. Some other possible assets include a car, a boat, fine art or future paycheques. As long as your collateral holds enough equity to cover your loan amount, it could be accepted by the lender.
However, as you are using your own assets as security, these could be repossessed if you do not keep on top of your loan repayments.
Eligibility criteria for a secured loan
To apply for a secured loan, you will usually need to own enough equity in your property to cover the amount you are borrowing.
You will also need to meet the following criteria to qualify for any loan product in the UK:
Be at least 18 years old
Be a UK resident
The lender you choose to borrow from might have additional eligibility requirements, make sure you read and understand these completely before you apply, as this could affect your credit score.
How do secured loans work?
Secured loans work by you putting up collateral against the money you are borrowing.
For example, if you want to borrow £15,000 for a new bespoke kitchen, the asset you are using as security, e.g. your home, will need to be worth at least £15,000 in equity.
If you do not repay your loan or you break your loan agreement, you risk the repossession of your home.
How long does it take to get a second-charge mortgage?
You can usually expect a little bit more admin when applying for a secured loan compared to an unsecured loan, as the lender will have to verify the value of your property and if you have any other borrowing secured against it. But. unlike regular mortgages, a second-charge mortgage usually takes less time.
Pros and cons of homeowner loans
Putting up collateral means that you could borrow larger sums with more favourable loan terms.
You could have access to better loan rates.
People with less than perfect credit scores are more likely to be accepted compared to other loans.
As you have to put up security against your loan, borrowing comes with a higher risk if you default on repayments.
Usually comes with fees attached.
Can take longer than other forms of borrowing.
You could be hit with fees if you decide to repay your loan early or faster.
FAQs
Secured loans, also known as a homeowner loan, can be used for a range of things, such as the following:
Buying a new car
Paying for a wedding
Home improvement
Buying furniture
Paying for a holiday
Consolidating debt
How much you can borrow on a secured loan depends on the lender you choose to go with, your financial position and your borrowing history. However, that being said, secured loans usually range from £10,000 to £100,000.
If your credit history is not so squeaky clean, you could still be eligible for a secure loan. However, you might have a higher interest rate.
Though your credit score may drop at first because of hard credit checks carried out by the lender, keeping on top of your regular secured loan repayments could help build a positive credit history. However, missing payments will also negatively impact your credit score and could lead to the repossession of your collateral.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.
Emily Herring is a Publisher at Finder specialising in credit-based products including credit cards and business and personal loans. Emily has a Masters in Creative Writing & Publishing and a Bachelor of Arts in Communication & Media.
Looking for a great deal on a £40,000 personal loan. We explore all your options and explain how to find the best one.
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We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
