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Secured Loans

  • Expert Secured Loan Advice
  • Borrow £25k – £500m
  • See if we can help you find the right deal

Get in touch for a free, no-obligation appointment about how we might be able to help you.

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What Are Secured Loans?

A secured loan is a loan that you take out using a high value asset as collateral. This can be a vehicle or your home. If you choose to secure the loan against your property, the lender is able to sell it to recoup any monies owed to them, should the loan fall into arrears.

A secured loan is sometimes referred to as a home loan, a homeowner loan or a second-charge mortgage.

A secured loan is usually used when the borrower has bad credit and needs to borrow a large amount of money. 

What’s The Difference Between A Secured and Unsecured Loan?

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There are a number of very important key differences between a secured and unsecured loan:

Secured Loan

  • A secured loan is tied to your asset. You can lose that asset, often your home, if you do not keep up repayments
  • Secured loans usually allow the borrower higher loan amounts
  • Most lenders will offer better loan rates on a secured loan, due to the applicant’s willingness to risk their asset
  • You can often obtain a longer repayment period resulting in lower monthly payments

Unsecured Loan

  • Whilst your credit score is damaged due to non-payment of an unsecured loan, your home is safe
  • The loan rates available will vary considerably and won’t be as favourable as with a secured loan
  • Which loan rate you obtain is predominantly based on your credit score
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What Types Of Secured Loans Are There?

There are three main types of secured loan:

Fixed Rate

Similarly to a fixed-rate mortgage, the interest rate will be fixed for an initial period. Once that period has ended you will revert to the lenders standard variable rate (SVR).

Variable

The interest on a variable rate loan is tied to the Bank of England base rate. Repayments are affected by any fluctuations in the base rate.

Short Term Fixed Rate

This is similar to a fixed rate loan, however, the fixed period is usually shorter. Once that period has ended, your rate will be based on the Bank of England base rate, rather than the lenders SVR.

Looking for a Secured Loan, Sort Finance can help.

How Much Can I Borrow With A Secured Loan?

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You’re usually able to borrow a larger amount with a secured loan than an unsecured loan. This can range from between £5,000 and £100,000. 

The loan amount will depend on equity you have in your home, or the value of other items used as collateral.

What Can A Secured Loan Be Used For?

Secured loans are often taken out for a high value purchase, such as a car or home improvements. They are also useful for debt consolidation. It’s very important to consider, however, whether you will end up paying more in overall interest, when consolidating smaller debts.

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What should I consider when applying for a secured loan?

The important things to consider before you apply for a secured loan are:

  • Are you eligible? – Usually you will need to be a UK citizen aged 21-65.
  • How much is your chosen collateral asset worth? Lenders will ask this.
  • Affordability – There are a range of loan repayment calculators available to help calculate your monthly repayments.
  • On top of interest, there are often arrangement fees and early repayment fees to consider.
  • The stability of your financial situation – Will you be able to afford the repayments if anything changes during the loan term?
  • Your credit score is affected when you make an application, particularly if you’re refused. This can affect your future borrowing.
  • Be aware that you may not be entitled to the advertised APRC. Lenders are only obliged to give this to 51% of their customers, your rate may be higher.
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Can I Get A Secured Loan With Bad Credit?

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If you’ve got a poor credit history you are more likely to be accepted for a secured loan than an unsecured loan. This is due to the significantly reduced risk to the lender.

Securing lending, particularly against your home, however, can be incredibly high risk. You should consider the potential consequences of losing your home, very carefully.

How Can A Mortgage Broker Help Me With A Secured Loan?

Much like mortgages, brokers will have a whole market view of the loans available to you. They can help you not only to determine your likelihood of acceptance, but also find the most suitable rates available to you. They may also offer debt advice.

Using your home as collateral to borrow money is complex and risky and having the support of a qualified broker is strongly advisable.

Looking for a Secured Loan, Sort Finance can help.