Secured Loans Glossary – 25 Terms to Know
Learn the essential terminology of secured loans. Our glossary explains 25 key terms in simple language.
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Secured Loan Terms Made Simple
Let’s be honest—secured loan jargon can feel like another language. APRs, equity, collateral… it’s enough to make anyone’s head spin. This glossary is here to strip it all back and explain things in plain English, so you feel more confident before you borrow. And if you want the bigger picture, our secured loans guide takes you through how these loans actually work.
Here are the must-know terms to help you borrow with confidence:
1. Secured loan
A secured loan is a loan that's ‘secured’ against something valuable you own - usually your home. This gives the lender reassurance that if you can't repay the loan, they have the right to recover their money by selling the asset.
2. Collateral
Collateral is the item or asset you agree to put forward as security for your loan. For most secured loans, that's your property. If you don't repay the loan, the lender can legally sell the collateral to get their money back.
3. Equity
Equity is the part of your home you actually own. It's calculated by subtracting your remaining mortgage balance from your home's current market value. The more equity you have, the more you might be able to borrow—something we explain in our secured loans overview.
4. Loan-to-value (LTV)
This is a percentage that compares how much you want to borrow against the value of your property. For example, if your home is worth £300,000 and you want to borrow £75,000, the LTV is just 25%. Lower LTVs usually mean better interest rates. You’ll find more detail on this in our main secured loans page.
5. Fixed rate
A fixed-rate loan means your interest rate (and therefore your monthly payments) stay the same for a set period - often 2, 3, or 5 years. It's a great option if you want predictable payments and protection from rising market rates.
6. Variable rate
With a variable rate, your interest rate can go up or down depending on the lender's standard variable rate (SVR) or movements in the market. Your monthly payments could change, which makes it harder to budget.
7. Term
The term is how long it'll take to repay the loan. Secured loan terms typically range from 3 to 30 years. A longer term usually means lower monthly payments, but you'll pay more interest over time.
8. APR (annual percentage rate)
APR shows the full cost of borrowing over a year, including the interest rate and any additional fees. It's designed to help you compare loan offers - just remember it's based on representative rates, not your personal quote.
9. APRC (annual percentage rate of charge)
APRC is the total cost of a mortgage over its full term, in the form of a yearly percentage. It includes interest, fees, and reflects any changes in the interest rate (e.g. from fixed to variable), helping you compare mortgage deals more accurately.
10. Early repayment charge (ERC)
This is a fee some lenders charge if you pay off your loan before the agreed term ends. It's worth checking for ERCs before signing your loan agreement, especially if you think you might repay early. It's often around 1% to 5% of the outstanding balance.
11. Debt consolidation
This means combining several debts into one secured loan for debt consolidation, can make repayments easier to manage and may reduce your interest rate - but be careful, as you'll be securing previously unsecured debt against your home.
12. Credit score
Your credit score reflects how reliable you've been when you borrowed and repaid money in the past. A higher score usually means better loan rates. But with secured loans, lenders may still approve you even with poor credit, since the loan is backed by your home.
13. Second-charge mortgage
A secured loan is often referred to as a ‘second-charge mortgage’— because it's a second loan secured on your home, alongside your main mortgage (the "first charge"). If you sell your home, your first mortgage is repaid first. You can read more about how these fit into the wider secured loans market in our main guide.
14. Underwriting
This is the process lenders use to assess your application. It involves looking at your income, credit history, property value, debts, etc. to decide whether to lend to you, and how much. It comes from the days when insurers would literally write their names and amounts under the details of a ship or cargo.
15. Broker
A loan broker is someone who helps you find and apply for the best secured loan for your needs. They work with multiple lenders and can save you time - but may charge you a fee or earn commission directly from the lender.
16. Title deeds
These legal documents show who owns your property. Some lenders may request to see these when offering you a secured loan, especially if there's no mortgage on the property.
17. Arrangement fee
This is a fee some lenders charge for setting up your secured loan. It's usually added to your loan amount, but you can also choose to pay it upfront. Always check if it's included in the APR.
18. Valuation
A property valuation helps the lender confirm how much your home is worth. It's used to work out your equity and loan-to-value ratio. Some lenders offer free valuations, while others charge for it.
19. Affordability check
Before approving your loan, lenders will look at your income, outgoings, and other debts to make sure you can afford the repayments. This is known as an affordability check and protects both you and the lender.
20. Arrears
Arrears occur when you've missed one or more scheduled loan payments. Being in arrears on a secured loan put you at risk of penalties and can eventually lead to legal proceedings or the forced sale of your property.
21. Default
Default means you've seriously breached your loan agreement by failing to make repayments over a longer period. This can harm your credit rating and give the lender the legal right to take possession of your home.
22. Repossession
If you fail to repay a secured loan, the lender has the legal right to repossess (take back) your property. This is a last resort, but it's the main risk of borrowing against your home.
23. Redemption
Redemption means fully repaying your secured loan. When you do this, the lender officially cancels their legal claim on your property. You may have to pay an early repayment charge (ERC) if you redeem the loan early.
24. Mortgage portability
Mortgage portability means you can transfer your existing mortgage deal, including its terms and interest rate, to a new property without paying early repayment charges.
25. Completion
This is the point when your secured loan is finalised and the funds are released. After completion, the lender’s charge (legal claim) is registered on your property, and you start making repayments.
That’s the jargon cracked. If you’re ready to put this into practice—or just want to compare real-world options—head over to our secured loans overview.
Frequently Asked Questions: Secured Loans
Can I get a secured loan with bad credit?
Yes, many lenders will still consider you for a secured loan even if you've had credit issues in the past. Since your home is used as security, lenders see less risk. You might pay a higher interest rate than someone with excellent credit, but approval is still very possible - especially if you have steady income and enough equity in your home.
How much can I borrow with a secured loan?
UK secured loans range from around £10,000 up to £500,000 or more, but the amount you can borrow depends on factors like your property's market value, how much equity you have, and your income and outgoings. Lenders will assess how much you can comfortably afford to repay before approving your loan.
How long does it take to get a secured loan?
The process usually takes 1 to 3 weeks, though it can be quicker. Having your documents (like ID, proof of income, and mortgage details) ready will speed things up. Some lenders offer faster approvals for simpler applications.
What happens if I miss a payment?
Missing payments on a secured loan is serious. You could face late fees, damage to your credit score, and eventually your property could be repossessed. If you're struggling, speak to your lender as soon as possible - they may offer solutions before things get worse.
Do I need to fully own my home to get a secured loan?
No, you don't need to own your home outright. As long as you have enough equity (value in the property beyond your mortgage), you can apply. The more equity you have, the better your chances of being approval and getting lower rates.
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