Loans

The right loan depends on what you need the money for, how much you want to borrow, and whether you own property. Each type works differently and suits different situations.

You want to borrow a large amount against your property

A secured loan (also called a second charge mortgage or homeowner loan) lets you borrow between £5,000 and £500,000 using your property as security. Rates are lower than unsecured borrowing because the lender has collateral. This suits homeowners who want to consolidate debts, fund home improvements, or raise capital without remortgaging. Most secured loans run for 3 to 30 years with fixed monthly repayments.

You need short-term finance for a property deal

A bridging loan provides fast, short-term funding, typically for 1 to 18 months. You might use one to buy a property at auction, complete a purchase before selling your current home, or fund a renovation project. Bridging loans are arranged quickly (sometimes within 5 to 10 working days) but charge higher monthly interest than standard loans, with rates starting from 0.4% per month.

You want to fund or grow your business

Business loans range from unsecured loans for smaller amounts to asset finance, invoice factoring, and merchant cash advances. The right option depends on your business turnover, how long you have been trading, and what the funds are for. Startups, established companies, and sole traders all have different routes to funding. Government-backed schemes can also improve your terms and eligibility.

You want to combine multiple debts into one payment

A debt consolidation loan rolls credit cards, store cards, overdrafts, and existing loans into a single monthly payment, often at a lower interest rate. Secured consolidation loans typically offer the lowest rates if you are a homeowner, while unsecured options are available for amounts under £25,000. The goal is to reduce your total monthly payments and simplify your finances.

You need a smaller, unsecured personal loan

Personal loans between £1,000 and £25,000 do not require property as security. Banks and specialist lenders offer fixed-rate personal loans with set monthly payments over 1 to 7 years. Rates depend on the amount borrowed and your credit profile, with the best rates typically available for loans between £7,500 and £15,000. The trade-off is lower borrowing limits compared to secured options.

UK borrowers can choose from several loan types. The table below compares how each works, what you can borrow, and who they suit best.

Secured loans and bridging loans are regulated by the FCA when secured against your home. Your property may be repossessed if you do not keep up repayments on a loan secured against it.

Loan costs vary widely depending on the type, amount, term, and your credit profile. Understanding both the interest rate and the fees helps you compare the true cost of borrowing.

Interest rates by loan type

Common fees to budget for

Always compare the total cost of borrowing over the full term rather than focusing only on the monthly payment. A lower interest rate with higher fees can sometimes cost more overall than a slightly higher rate with no arrangement fee.

Lenders assess several factors when deciding whether to approve your application and what rate to offer. Meeting all criteria does not guarantee approval, but understanding what lenders look for helps you prepare.

• Credit history: lenders check your credit file for missed payments, defaults, CCJs, and overall repayment history. Better credit profiles attract lower rates, but specialist lenders work with adverse credit
• Income and affordability: you need to demonstrate that you can comfortably afford the monthly repayments alongside your existing commitments. Lenders typically want your total debt payments below 40% to 50% of your gross income
• Property equity (secured loans): for secured and bridging loans, lenders assess your loan-to-value ratio. Most require at least 20% equity remaining in your property after the new loan is added to your existing mortgage
• Employment status: employed, self-employed, company directors, and retirees can all access loans, but documentation requirements differ. Self-employed borrowers typically need 2 years of accounts or SA302 tax returns
• Loan purpose: lenders want to know what the funds are for. Acceptable purposes include home improvements, debt consolidation, business investment, property purchase, and large personal expenses
• Existing commitments: your current mortgage payments, credit card balances, car finance, and other loans all reduce how much additional borrowing a lender will approve
• Age requirements: most lenders require you to be at least 18 (21 for some secured loans) and set maximum ages at the end of the loan term, typically between 75 and 85

A broker can assess your situation and match you with lenders most likely to approve your application, reducing the risk of rejections that mark your credit file.

Picking the right loan means weighing more than just the interest rate. These five steps help you compare properly and avoid common mistakes.

1. Work out exactly how much you need to borrow: borrowing too much costs you in unnecessary interest. Borrowing too little may mean you need a second loan at worse terms. If consolidating debts, add up every balance including any settlement charges your existing lenders may apply
2. Compare the total cost, not just the monthly payment: a longer repayment term reduces your monthly payment but increases the total interest paid. A 10-year secured loan at 6% APR on £30,000 costs £9,967 in interest, while the same loan over 20 years costs £21,598
3. Check whether a secured or unsecured loan is cheaper: secured loans offer lower rates but carry the risk of losing your home if you cannot repay. For amounts under £15,000, an unsecured personal loan may cost less overall once you factor in valuation and legal fees
4. Use an eligibility checker before applying: soft-search eligibility tools let you see which lenders are likely to approve you without marking your credit file. Multiple hard credit searches from direct applications can temporarily reduce your credit score
5. Get advice if you are unsure: a whole-of-market broker compares deals across dozens of lenders and can find options you would not see on comparison sites. This is especially valuable for larger loans, adverse credit situations, or complex income structures

Applying for a loan through a broker follows a straightforward process. Most applications take between 2 and 6 weeks from start to completion, depending on the loan type.

1. Tell us what you need: answer a few quick questions about how much you want to borrow, what it is for, and your basic financial details. This takes around 5 minutes and does not affect your credit score
2. Get matched with an advisor: based on your answers, you are paired with a qualified advisor who specialises in your loan type. They review your situation and explain your options in plain language
3. Compare offers from multiple lenders: your advisor searches across 90+ lenders to find the deals you are eligible for. You receive a clear comparison of rates, fees, and total costs so you can see exactly what each option costs
4. Submit your application: once you choose a deal, your advisor handles the paperwork and submits the application to the lender. For secured loans, a property valuation is arranged at this stage
5. Receive your funds: after the lender approves the application and completes any checks, the funds are released. Unsecured loans can complete in days; secured loans typically take 2 to 4 weeks; bridging loans can complete in 5 to 10 working days