Rhiannon Philps
Tim Leonard
Adam FrenchMany or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.
A secured loan may be worth considering if you need to borrow a larger loan amount or you’re finding it difficult to get a personal loan. It may be easier to get a secured loan or borrow more because you must put forward an asset that you own as security for the loan. This will typically be your home, which explains why secured loans are often also called second charge mortgages or homeowner loans.
Importantly, there’s a risk with a secured loan that you could lose your property if you fail to keep up with your repayments – it’s also why we’d strongly recommend seeking financial advice before you proceed.
Working out whether a secured loan is the right choice for you is vital. Our roundup of some of the best secured loan lenders can help as you begin your search. Our star ratings are based on our expert assessment of the features that borrowers have told us are most important to them when looking for a secured loan.
Get a quote without affecting 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 a loan or any other debt secured on it.
Information for tenants
You must be a homeowner to apply for a Secured Loan via Norton
If you’re not a homeowner and would still like to search for a personal loan, then you can try searching for an unsecured loan via our loans eligibility service with Monevo.
Editor’s Picks
Secured Loans |
Editors Pick |
Maximum LTV |
Available amounts |
Available Terms |
|
|---|---|---|---|---|---|
Pepper Money Secured Loan |
Overall
|
95%
|
£5,000 to £1,000,000
|
3 to 30 years
|
|
Central Trust Secured Loan |
Customer support
|
90%
|
£10,000 to £250,000
|
3 to 25 years
|
*These secured loan providers are part of a panel of lenders available via a comparison and quote service provided via our partnership with Norton Finance. Data provided is submitted directly to Norton Finance. Nerdwallet Ltd does not form part of the service beyond this introduction.
Think carefully before taking out any mortgage. Your home may be repossessed if you do not keep up repayments. If you are thinking of consolidating existing borrowings, you should be aware that you may be extending the term of the debt, therefore increasing the total amount you repay.
Important information about Editor’s Picks
The Editor’s Picks listed above are based on NerdWallet’s editorial team’s analysis of products reviewed by us and is not a whole of market view. The team evaluates which brands offer standout features that may be important to you.
Editor’s Picks exclude any assessment of a providers’ rates, fees or product suitability, which must always be a priority when considering any financial product. Always consider others in the market and obtain professional advice.
Editor’s Picks are our own opinions and don’t constitute advice, recommendation or suitability of your financial circumstances. They are editorially independent of any partnerships with NerdWallet.
NerdWallet’s Best Secured Loan Lenders July 2024
This selection of brands has been reviewed and evaluated by Nerdwallet, but others are available in the UK market. Find out what we mean when we say ‘best’, why we are comfortable using it, and an in-depth explanation of Nerdwallet UK’s review methodology.
Provider |
NerdWallet’s Rating |
Min.Loan Amount |
Max.Loan Amount |
Min.Loan Term |
Max.Loan Term |
|
|---|---|---|---|---|---|---|
|
|
4.5 / 5 | £5,000 | £1,000,000 | 36 months | 360 months | |
|
|
4.5 / 5 | £3,000 | £250,000 | 12 months | 300 months | |
|
4.5 / 5 | £10,000 | £250,000 | 36 months | 300 months | |
|
4.5 / 5 | £10,000 | £500,000 | 36 months | 360 months | |
|
4.0 / 5 | £10,000 | £500,000 | 36 months | 420 months | |
|
4.0 / 5 | £20,000 | £250,000 | 36 months | 360 months | |
|
|
4.0 / 5 | £10,000 | £500,000 | 60 months | 360 months | |
|
|
3.5 / 5 | £10,000 | £200,000 | 24 months | 360 months |
Think carefully about securing debt on your home. Your home may be repossessed if you do not keep up repayments.
Consolidating multiple debts into one loan can extend the term of your borrowing and increase your cost of borrowing
Important information: Our Reviews, Star Ratings and Editor’s Picks do not consider the product provider’s lending rates and therefore do not reflect how much it costs to borrow from the reviewed brand. Always compare rates from other providers when considering any type of borrowing. Loans for consumers with bad credit can have very high interest rates. Loan rates offered can be dependent on your personal circumstances and specific loan requirements. If you have poor credit, only borrow what is essential and if you can comfortably afford repayments.
Pepper Money Secured Loan
3 to 30 years
£5,000 to £1,000,000
95%
Fixed and Variable
- Minimum property value of £75,000
- Available to self-employed, employed, contractor income applicants
- Property must be in the UK and already have a first charge mortgage secured against it
- The loan must be secured on your primary residential address
This provider is available via our partner, Norton Finance.
A Pepper Money secured loan may be worth considering if you need to borrow a larger amount, with loans potentially offered up to 95% loan-to-value.
Pepper Money secured loan key features
- Pepper Money offers a range of smaller and larger loans to a maximum of £1 million and 95% LTV.
- Longer repayment periods of up to 30 years are allowed.
- Pepper’s website includes a calculator to give you an idea of repayment amounts and the interest payable.
| Loan amounts | £5,000 – £1 million |
| Maximum loan-to-value | 95% |
| Term length | 3 – 30 years |
| Rate options | Fixed, Variable |
| Minimum property value | £75,000 |
| Loan calculator on website | Yes |
| Customer support | Phone |
Pros:
- Fixed, variable and discounted rates are available.
- You can borrow up to 95% of equity.
- There is a low minimum loan amount.
- You can select from a wide range of loan terms.
Cons:
- Borrowing 95% of the value of your home comes with increased risk to a borrower.
- Pepper Money does not offer email replies as part of its customer support.
» MORE: Pepper Money secured loan review
Norton Home Loans Secured Loan
1 to 25 years
£3,000 to £250,000
80%
Fixed and Variable
- Must be at least 21 years old to apply
- Term not to extend past 85th birthday of customer
- Must not have been bankrupt or subject to a Debt Relief Order within the last 3 years
This provider is available via our partner, Norton Finance.
A Norton Home Loan secured loan may be an option if you want to borrow a smaller amount over a shorter term.
Norton Home Loans secured loan key features
- Smaller loan amounts as low as £3,000 are available.
- A minimum loan term of one year means you can pay your loan off quickly.
- There is no set minimum property value.
| Loan amounts | £3,000 – £250,000 |
| Maximum loan-to-value | 80% |
| Term length | 1 – 25 years |
| Rate options | Fixed, Variable |
| Minimum property value | No minimum |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and variable rate options are available.
- It offers low minimum loan amounts.
- You can select short repayment terms starting from one year.
Cons:
- You can find longer maximum loan terms offered by some other secured loan lenders.
- Larger loan amounts are available elsewhere.
» MORE: Norton Home Loans secured loan review
Central Trust Secured Loan
3 to 25 years
£10,000 to £250,000
90%
Fixed and Variable
- Lending available in England, Wales, Scotland and Northern Ireland (Northern Ireland capped at 70% LTV)
- Employed, self-employed and contractors are eligible to apply
- Minimum time employed 3 months, Minimum 12 months self-employment history
This provider is available via our partner, Norton Finance.
Central Trust could be a good option for fast online customer support.
Central Trust secured loan key features
- Central Trust offers live chat support with real people.
- Loans are available up to 90% LTV.
- The minimum property value required is £75,000.
| Loan amounts | £10,000 – £250,000 |
| Maximum loan-to-value | 90% |
| Term length | 3 – 25 years |
| Rate options | Fixed, Variable |
| Minimum property value | £75,000 |
| Loan calculator on website | No |
| Customer support | Email, Phone, Live chat |
Pros:
- Fixed and variable rate options are available.
- You can apply direct or through a broker.
- Central Trust offers email, phone and live chat customer support with an adviser.
Cons:
- Its maximum repayment term is shorter than most other secured loan lenders.
- The range of loan amounts on offer is fairly narrow.
- You can find higher LTVs elsewhere.
» MORE: Central Trust secured loan review
United Trust Bank Secured Loan
3 to 30 years
£10,000 to £500,000
85%
Fixed and Variable
- 12-month minimum mortgage history required
- Must be located in England, Wales or Mainland Scotland
- Must have a minimum income of £15,000
This provider is available via our partner, Norton Finance.
A United Trust Bank secured loan may appeal if you need to borrow a larger amount and want a broad choice of repayment terms.
United Trust Bank secured loan key features
- Large loans of up to £500,000 are available.
- Repayment periods range from as short as three years to as long as 30 years.
- You can borrow up to 85% LTV.
| Loan amounts | £10,000 – £500,000 |
| Maximum loan-to-value | 85% |
| Term length | 3 – 30 years |
| Rate options | Fixed, Variable |
| Minimum property value | £90,000 |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and tracker rate options are available.
- There is a high maximum loan amount.
- There is a wide range of loan terms to choose from.
- United Trust Bank offers email and phone customer support.
Cons:
- There is a high minimum loan size.
- You can find higher LTVs available elsewhere.
» MORE: United Trust Bank secured loan review
West One Secured Loan
3 to 35 years
£10,000 to £500,000
85%
Fixed and Variable
- Must be at least 21 years old, with the loan term ending by age 85
- For self-employed applicants a minimum trading history of 1 year is required
- For employed applicants a minimum of 3 months employment and not in a probationary period acceptable
- Retired applicants must be able to meet the minimum income threshold from private pension sources
- Minimum property value of £100,000
This provider is available via our partner, Norton Finance.
West One offers larger secured loans and a clear indication of the qualifying criteria you need to meet.
West One secured loan key features
- Loans of up to £500,000 and 85% LTV are available.
- Longer repayment periods of up to 35 years are permitted.
- The West One website clearly states the eligibility criteria you must meet.
| Loan amounts | £10,000 – £500,000 |
| Maximum loan-to-value | 85% |
| Term length | 3 – 35 years |
| Rate options | Fixed, Variable |
| Minimum property value | £100,000 |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and variable rate options are available.
- You can select from a wide range of loan terms.
- It offers large loan amounts.
Cons:
- Higher LTVs are offered by some other secured loan lenders.
» MORE: West One secured loan review
Together Secured Loan
3 to 30 years
£20,000 to £250,000
75%
Fixed and Variable
- Minimum age 18 years, up to a maximum age of 80 years at end of term
- For employed applicants,12 months continuous employment or a minimum of 6 months with your current employer is required
- For self-employed applicants, the last two SA302 documents and up-to-date business banking statements (last 3 months) or accountants certificate is required
- Maximum of 4 applicants
- Regular monthly bonuses, commission and overtime accepted. Benefits/DWP can be accepted
This provider is available via our partner, Norton Finance.
Together secured loans offer a good range of repayment terms and welcome applications regardless of your property’s value.
Together secured loan key features
- Repayment periods range from three years to a maximum of 30 years.
- Loans are available for between £20,000 and £250,000.
- There is no set minimum property value.
| Loan amounts | £20,000 – £250,000 |
| Maximum loan-to-value | 75% |
| Term length | 3 – 30 years |
| Rate options | Fixed, Variable |
| Minimum property value | No minimum |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and variable rate options are available.
- You can select from a wide range of loan terms.
- There is no minimum property value.
Cons:
- You can find higher LTVs available elsewhere.
- Other lenders offer a wider range of loan amounts.
Selina Finance Secured Loan
5 to 30 years
£10,000 to £500,000
85%
Fixed and Variable
- Minimum property value of £100,000
- Must be a permanent UK resident with at least 3 years of address history
- Must have a personal income of at least: £22,500 per year for individual applications, £30,000 per year for joint applications
- Must have a good credit history. Each applicant must individually meet our credit history requirements
This provider is available via our partner, Norton Finance.
Selina Finance could be an option if you want a longer repayment term and a good indication of the eligibility criteria for its homeowner loans.
Selina Finance secured loan key features
- Repayment periods range from five years to a maximum of 30 years.
- Loans are available for up to £500,000 and 85% LTV.
- Detailed eligibility criteria can be found on the Selina website.
| Loan amounts | £10,000 – £500,000 |
| Maximum loan-to-value | 85% |
| Term length | 5 – 30 years |
| Rate options | Fixed, Variable |
| Minimum property value | £100,000 |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and variable rate options are available.
- You can select longer repayment terms of up to 30 years.
- Selina offers a higher maximum loan amount than some other lenders.
Cons:
- You can find shorter minimum loan terms elsewhere.
- Smaller loans are available through some other secured loan lenders.
- Higher LTVs are available elsewhere.
» MORE: Selina secured loan review
Spring Finance Secured Loan
2 to 30 years
£10,000 to £200,000
80%
Fixed and Variable
- Must be based in England, Wales and mainland Scotland only
- 3 months employment history required
- Minimum gross annual household income of £18,000 – £15,000 must be earned from employment and/or private pensions
- Minimum property value of £100,000
This provider is available via our partner, Norton Finance.
Spring Finance may be worth considering if you want a shorter repayment period.
Spring Finance secured loan key features
- A minimum loan term of two years allows you to pay your loan off quickly.
- Loans are available up to 80% LTV and a maximum of £200,000.
- Your property must be worth at least £100,000.
| Loan amounts | £10,000 – £200,000 |
| Maximum loan-to-value | 80% |
| Term length | 2 – 30 years |
| Rate options | Fixed, Variable |
| Minimum property value | £100,000 |
| Loan calculator on website | No |
| Customer support | Email, Phone |
Pros:
- Fixed and variable rate options are available.
- You can select from a wide range of loan terms.
Cons:
- Larger loan amounts are offered by other lenders.
- You can find higher LTVs available elsewhere.
» MORE: Spring Finance secured loan review
The pros and cons featured with each brand are chosen by us based on a combination of our expert opinions from research of the product market and an exclusive survey of UK consumers conducted on behalf of NerdWallet UK to identify the features that people feel are most important. There are other pros and cons that should be taken into account before considering a financial product. Information was correct at the time of publication but may have changed since.
Nerdwallet Survey: February 2023
What is a secured loan?
A secured loan allows you to borrow funds secured against an asset you own, which is used as collateral or security for the loan. The asset, usually your home, can give a lender confidence that it will get its money back. In turn, you may access larger loan amounts or have a better chance of being accepted for a loan.
However, if you fail to keep up with your repayments the secured loan lender can force the sale of your property to get back what you owe. Crucially, this means you could lose your home.
Other types of secured loans may allow you to borrow against other high-value assets, such as your car or jewellery. However, the focus of this guide is loans secured against property only.
» MORE: What are secured loans?
How do secured loans work?
In many respects, a secured loan works in a similar way to most other loans. You borrow a lump sum and then repay it, plus interest and fees, in regular monthly instalments until the debt is cleared.
The main difference is that your property is being used as collateral or security for the loan. Keep up with your repayments and this shouldn’t pose a problem. However, fall behind on repayments, and the lender could start repossession proceedings on your home to get its money back.
How much can you borrow with a secured loan?
The amount you can borrow using a secured loan will depend on several factors, including:
- the equity in your house
- your regular income and outgoings
- any debt you have outstanding
- your credit score
- the reason for wanting the loan
- the lender’s specific eligibility criteria
Each lender has a maximum loan-to-value (LTV) they are willing to lend. For example, if it is 90% LTV it means the most you can borrow as a secured loan is 90% of your home’s value, including your existing mortgage.
If you meet the necessary criteria, some lenders are willing to offer secured loans for up to £1 million, and potentially more. However, how much you can afford to repay each month will always be an important consideration when a lender is deciding on the size of the loan it will offer.
What is the difference between a secured and unsecured loan?
The main difference is that a secured loan requires you to provide security for the loan, in the form of your property, whereas an unsecured loan does not.
This means a secured loan lender can repossess your home if you fail to keep up with your repayments, whereas your property isn’t at direct risk of being lost if you don’t repay an unsecured loan. Unsecured loans are also often called personal loans.
Because you’re using your home as security applying for a secured loan can be more complicated, take longer and cost more. You’ll need to own a home in the first place as well, which isn’t the case with an unsecured loan.
On the other hand, secured loans tend to allow larger loan amounts and may have lower interest rates. This is because lenders know they have the security of your home to fall back on if you don’t repay, and feel they are taking on less risk. Secured loans may also offer longer repayment periods, sometimes up to 35 years. A secured loan may also be easier to obtain if a less-than-perfect credit score is making it hard to get an unsecured loan.
» MORE: Best personal loans and rates
Secured vs unsecured loans
| SECURED LOANS | UNSECURED LOANS |
|---|---|
| The loan is secured against a high-value asset, typically your house. | These loans don’t require any security or collateral. |
| You may be able to borrow larger amounts over longer periods. | Loan amounts are typically smaller and terms are typically shorter than on secured loans. |
| It may be easier for someone with a poorer credit score to get. | Someone with a poor credit score may struggle to access unsecured loans, or they may face higher interest rates if they are accepted. |
| Interest rates can be lower compared to unsecured loans. | Without any security, interest rates can be higher compared to secured loans. |
» MORE: How secured loans differ from unsecured loans
Pros and cons of secured loans
It’s always vital to weigh up the pros and cons of secured loans before you apply.
Advantages of secured loans
- They typically offer access to large sums.
- You can usually select to have longer to repay the loan.
- Interest rates may be lower than for unsecured loans.
- They may be easier to be approved for than other types of loan.
Cons of secured loans
- You risk losing your home if you default on your repayments.
- They are only available if you have enough equity in your property.
- A longer repayment term usually means paying more interest overall.
- Arrangement and legal fees may be expensive.
- Interest rates can be variable, meaning your repayments could change.
Is a secured loan right for you?
A secured loan may be worth exploring if you need to borrow a large sum of money, for example, to cover the cost of home improvements or to buy a car. You may also find it easier to get a secured loan if a bad credit score means you’re finding it difficult to get a personal loan.
Sometimes secured loans can also be used for debt consolidation, where you bring several debts together. Depending on the interest rate and term of the new loan, you could lower your monthly repayments, though this may mean you end up paying more in interest overall.
Whatever your reason for taking a secured loan, you must be confident that you can afford to meet the repayments in full. You could lose your home if you don’t. If you take an unsecured personal loan instead, your property won’t be at direct risk of repossession.
Because of the risks involved, it’s almost always a good idea to talk to a financial adviser before taking out any loan secured against your property.
» MORE: Should you take out a loan against your house?
Secured loan rates
The secured loan interest rate you pay will depend on the lender, as well as a range of other factors, including:
- the amount you want to borrow
- the value of the asset you’re using as security for the loan
- the length of the loan term
- your credit score and overall financial situation
Secured loan interest rates can sometimes be lower than rates on unsecured personal loans because the asset you put forward as security for the loan minimises the risk for the lender.
Can you get fixed-rate secured loans?
Secured loans can have fixed or variable interest rates. With a fixed rate, you will be charged the same rate of interest for a limited period, or the entire term of the loan. Your monthly repayments should stay the same when you’re in the fixed rate period.
With a variable interest rate, the interest you are charged can change during the loan term, meaning your repayments have the potential to rise and fall.
Am I eligible for a secured loan?
To be eligible for a secured loan, you will need to be a homeowner and have a certain amount of equity in your home. You will also need to satisfy the other secured loan eligibility criteria of a lender, which will typically relate to your age, employment and income. There may also be a minimum property value that lenders will accept.
Although it’s possible to get a secured loan with bad credit, your credit score and status will still be important and may prevent you from qualifying for a loan from certain lenders. Always check the criteria set by a lender before applying for a secured loan to see if it’s likely you are eligible.
Are secured loans easier to get than unsecured loans?
In some ways, secured loans can be easier to get than an unsecured loan. Having the security of the property reassures lenders that they will be able to get their money back if you don’t meet your repayments. This could increase the chances of you being offered a loan if you’d otherwise be considered a riskier proposition, including if you have a lower credit score.
Unsecured loans, on the other hand, don’t involve an asset being used as security. This means the lender carries more risk on its shoulders, which could, in turn, make it more difficult for certain borrowers to get a loan.
What credit score is needed for a secured loan?
There is no specific credit score that will guarantee you’ll be able to get a secured loan. Having a good credit score may improve your chances of approval, but lenders will have different criteria to decide whether to offer you a loan. This includes the value of your property and wider financial situation.
Equally, having a lower credit score won’t necessarily prevent you from getting a secured loan. You may find it easier to get a secured loan with a poorer credit score than an unsecured loan. This is because lenders have the security of your property to fall back on if you fail to make repayments.
Can I get a secured loan with bad credit?
It may be possible to get a secured loan with bad credit, but this will depend on the lender and its individual criteria.
If you have a poor credit score you may find it easier to get accepted for a secured loan and access lower interest rates than with an unsecured loan, as the property put forward as collateral lowers the risk for the lender. The lender can repossess your property should you fail to repay the loan in full.
However, even if you can get a secured loan with bad credit, it doesn’t necessarily mean it will be the right option for you. Always consider the risks involved and the potential alternatives, such as personal loans, that could meet your requirements.
» MORE: Bad credit secured loans
What else to consider before applying for a secured loan
Secured loans are a major commitment and can be risky, so it’s important to think carefully about whether it’s right for you.
A secured loan can affect your ability to remortgage and potentially leave you with fewer remortgage options. And if you want to move home, you may need to pay your loan back, or potentially transfer it to your new property, if you’re selling a house with a secured loan against it.
Also, think carefully about the loan amount you need and the time you need to pay it back. A longer repayment period can mean lower monthly repayments but you’ll pay more in interest over the duration of your loan. The fees and charges on some secured loans can be expensive too. Arrangement fees, valuation fees (on your property), and broker fees could all be charged.
To compare the cost of secured loans, you can look at the annual percentage rate of charge (APRC). This indicates how much a loan could cost over a year, taking into account interest and fees. However, the rate you’re offered may be higher or lower than the advertised figure.
Always take the time to compare secured loan lenders and rates to make sure you find the option that is best suited to you.
Do secured loans affect your credit score?
Some lenders allow you to check your eligibility for a secured loan without it affecting your credit score – this will be done by conducting a soft search of your credit.
However, if you subsequently proceed with a formal application for a secured loan, there will be a hard check of your credit history to see how you have managed your finances in the past. This credit check could affect your score.
If you make your secured loan repayments on time and pay off the loan in full, your credit score could improve, depending on how well you manage your other credit responsibilities.
But if you miss one or more payments of a secured loan, the lender may report this to credit reference agencies, which is likely to negatively affect your credit score.
How to find and compare secured loans
If a secured loan is the right option for you, it’s important to compare secured loan lenders. The loan amounts, LTVs, repayment terms and other features can all differ between lenders, as well as the interest rates and fees.
Some lenders will only accept secured loan applications through a broker, while others may allow you to apply directly yourself. But it’s worth noting that brokers may have access to different lenders and loan options that you can’t access yourself. Brokers are also usually best placed to help find the right kind of secured loan for your situation. Always make sure you fully understand any broker fees that will be charged for this service.
How to apply for a secured loan
To apply for a secured loan, you will need to provide certain details, including:
- your name, address, contact and personal details
- your income and employment status
- other financial information, such as your financial commitments, spending habits and debts
- information about your property, including its value and the equity held
Lenders will also run a credit check as part of the application process.
All of this information is used to decide whether you’ll be offered a loan and on what terms, including the interest rate.
It’s important to check that you meet the lender’s eligibility criteria before applying. You should only apply if you’re certain a secured loan is the right choice for you and are comfortable with the possible risks involved.
Depending on the lender, you may need to apply through a broker or you may be able to apply directly.
How long does it take to get a secured loan?
It usually takes several weeks to get a secured loan due to the checks and legal work involved with using a property as security for the loan. It will almost always take longer to get a secured loan than an unsecured loan, where security isn’t required.
Secured loan repayments
When you have a secured loan, it’s vital to make your repayments on time and in full – if you don’t, you could lose your property to the lender. If you don’t think you’ll be able to make a repayment, talk to your lender straight away.
If your loan has a variable rate of interest, your monthly payments could change making it essential to have leeway in your budget in case interest rates rise and your repayments increase.
» MORE: What to do if you’re struggling with secured debt
What happens if you default on a secured loan?
Defaulting on a secured loan could have serious consequences, including losing your home. If you think you’re going to miss any payments, or you’ve already missed one, contact your lender immediately.
If you are struggling with repayments, you could also contact a debt advice charity, such as Citizens Advice or StepChange, for help and guidance.
If you don’t reach an agreement with your lender and you continue to miss payments, your lender is entitled to repossess your property. This is typically a last resort after the lender has tried all other ways to get you to repay the loan, but is a real risk nonetheless.
Missing payments can also harm your credit score, making it more difficult to get credit in the future.
» MORE: What is a default notice?
Can you pay off a secured loan early?
A lender may allow you to pay off a secured loan early but there could be an early repayment charge for doing so. Charges and how they’re calculated vary between lenders, but usually equate to a few month’s interest or a percentage of your outstanding loan amount. Check the terms of your loan agreement or contact your lender to find out if you can repay early and confirm how much you’d have to pay if charges apply.
Alternatives to a secured loan
There are several alternatives to secured loans that could be less risky, cheaper, or both, depending on your situation.
Remortgaging
If you have enough equity in your property, you may want to consider borrowing more on your existing mortgage and remortgaging to release equity that you have in your home.
Guarantor loan
Rather than using your property as security, with a guarantor loan a relative or close friend puts themself forward as a guarantor and promises to step in to repay the loan if you don’t. However, their assets are at risk if neither of you pay.
Credit cards
If you need to borrow a smaller amount over a shorter term, a credit card with an interest-free purchase period could prove less risky and cost you less in interest than a secured loan. Crucially, however, this relies on you paying the credit card off before the interest-free period ends.
Personal loans
If you need a relatively small loan and don’t want to put your property at direct risk, personal loans are unsecured, meaning they can be taken out without having to put forward an asset as security.
» MORE: Find the best personal loans
Secured Loan UK FAQs
Secured loans can be easier to get than unsecured loans because lenders feel more secure knowing that you’re offering your home as security for the loan. However, it can take several weeks to get the funds due to the checks and legal work involved with using a property as security for the loan.
To get a secured loan you’ll need to be a homeowner and able to meet the other eligibility criteria set by a lender relating to your income, outgoings, employment status and credit score to prove you can afford to repay the loan.
A lender may want a formal valuation of your home to check if it’s worth enough to be used as security for your secured loan.
Your application for a secured loan is likely to be rejected if you can’t meet a lender’s eligibility criteria. This could be due to many reasons, including your home not being worth enough, not holding enough equity in your property, your income being too low, or your credit score being too low.
A secured loan may be suitable depending on your circumstances. For example, you may need to borrow a larger sum of money over a longer period of time. However, you must be certain that you can pay a secured loan back, or you could lose your property if you fail to keep up with your repayments.
Yes, you can sell your home if you have a secured loan against it. To do so, you’ll normally have to pay the loan back before you sell, or promise to pay it back from the money raised when it is sold. Some lenders may also let you transfer the secured loan to your new home.
There are lenders which allow you to use a vehicle as security for a secured loan. However, interest rates on these logbook loans tend to be much higher than on other types of loan, and you risk losing your car if you fail to keep up with your repayments.
Best secured loans methodology
NerdWallet has evaluated and reviewed 11 secured loan lenders in the UK.
We considered 20 data points for each loan, based on the criteria that matter most to customers, scoring them on loan features, flexibility, application process and availability of customer support, among other factors. This information was gathered from each lender’s website, company representatives and independent financial product analyst Defaqto. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy.
Using the same data across all products and features, we were able to create star ratings, presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’.
Important information: Neither our review or star ratings considered lending rates, and therefore does not reflect how much it costs to borrow from these lenders. Always check and compare a lender’s rates against others on the market when considering a secured loan. The rate you are offered will be dependent on your circumstances, loan amount and term, and may differ from the advertised rate. If you have poor credit, only borrow if it is necessary and you can comfortably afford repayments.
Think carefully about securing debt on your home. Your home may be repossessed if you do not keep up repayments.
Late repayments can cause you serious money problems.
Consolidating multiple debts into one loan can extend the term of your borrowing and increase your cost of borrowing.
Debt charity information
If you are struggling with debt, seek advice from one of these debt advice services:
- Citizens Advice
- MoneyHelper (formerly The Money Advice Service)
- National Debtline
- StepChange
- The Money Charity
Review methodology
At NerdWallet UK, we base our reviews and our ‘Best’ pages on the results of surveys we undertook about what was important to people who use these products. This allows us to look at products impartially of any commercial arrangements we have and fairly rate the products on the same set of criteria.
Best means our ‘Best’ and is based only on what products we have aligned to our surveys, which form the basis of our reviews and ratings. This means that there will be other products on the market that we have not included in our ‘Best’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’.
Our reviews may display lenders’ rates. This additional information has not been included in our evaluations but is still very important when choosing a product. Rates offered can depend on circumstances, amount and term. Always check details before proceeding with any financial product.
Product details reflect the information that was available at that time but may have changed since. We strive to give you a review on as many products as possible, but there will be products not included on the market. The review is our opinion, but it does not constitute advice, recommendation or suitability for your financial circumstances.
While we try to provide you with accurate information, the providers can change the terms of their products at any time, therefore it is advisable to check the terms before you proceed.
You can view our full review methodology here.
About the Author
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