What is a secured loan?

How do secured loans work?

A secured loan, also known as a homeowner loan works in a similar way to a regular loan; the main difference is that a secured loan is secured against your property. This usually means you can borrow more at a lower rate; this makes secured loans a good way to finance home improvement or consolidating debt.

To be eligible for a secured loan, you’ll need to be a homeowner or hold equity in a property.

The main features of a secured loan include

• You have to pay interest for the duration of the loan term
• You have to pass a credit and affordability check
• Repayment periods from 1 to 35 years
• You’re able to borrow up to a set percentage of the value of your property

How can you use a secured loan?

Homeowner loans are ideal for people who need to borrow a large amount of money. One of the most common uses for secured loans is for funding home improvements, renovations or an extension.

A secured loan can also be used as a way of consolidating debt, lowering the overall amount of interest you pay on that debt. When taking out a loan to consolidate debt, it’s important to understand the risks that you’re taking when you take out a secured loan.

What type of property can you use for a secured loan?

Secured loans use your property as security against the loan. You can use almost any type of property, including;

• Houses
• Bungalows
• Flats
• Cottages

How much can you borrow with a secured loan?

We currently offer loans of between £20,000 and £250,000+, but how much you can borrow depends on:

• Value of your property
• Your income
• Your credit record
• Your age and loan term

How much do secured loans cost?

Like all loans, the cost of a secured loan is determined by the interest rate, but you also need to watch out for any fees charged on top of that.

What you need to apply for a secured loan

1. Decide how much you need to borrow: Work out exactly what you need to borrow.
2. Work out your total loan to value: You will need an accurate valuation of your property and to know the outstanding balance on your mortgage if you have one.
3. Choose how long you need to repay the loan: Work out what monthly payments you can afford and estimate how long you need to pay back your loan.
4. Speak to one of our advisers: They take your information and search the market for the best loan for your circumstances.

What happens after you’ve applied for a secured loan?

Once you’ve applied for the loan you want, the lender will then do some checks before you get your funds. These include:

• Checking your credit record
• Checking your income and recent payslips
• Checking the housing registry to confirm you own the property
• Checking the value of your property and your equity

This process typically takes between 3-5 weeks after which the money will be transferred into your chosen bank account.

Paying back your loan

Most secured loans require you to pay monthly instalments by direct debit, but if you would prefer to pay using a different method, speak to one of our advisers.