Top 8 Things to Check Before Taking Out a Secured Loan
Thinking about borrowing against your home? Before you go any further, our 2025 checklist has eight practical things to spot-check—like equity, affordability, flexibility—so you’re not caught off guard later on.
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Before You Borrow: Key Things to Check
Taking out a secured loan can be a smart way to borrow larger amounts at lower rates - but it's not a decision to rush. Since your home is used as security, it's important to go in with your eyes open. Here are 8 key things to check before applying, so you're more in control from the start.
1. Know how much equity you have
First up, figure out how much equity you’ve actually built up—the value of your home minus what you still owe on your mortgage. The more you’ve paid off, the better the borrowing options and usually the lower the interest. Keep that rough LTV (loan-to-value) in mind—it’s what lenders always check.
2. Work out what you can afford
It’s tempting to just think ‘How much can I borrow?’ — but a smarter (and safer) question is: can you comfortably cover the repayments each month? Look at your salary, regular bills, debts, and daily costs. And, ask yourself: what if rates go up or your income shrinks a bit? Plan for that too.
3. Compare lenders—not just interest rates.
Look beyond the headline rate. The interest rate grabs attention, but it’s only part of the picture. Different lenders add in arrangement fees, early repayment charges and other bits that can bump up the cost. Two loans might look the same on paper, but once you add those extras, one could end up a lot pricier than the other. It’s worth shopping around before you settle on a deal. For a broader look at secured loan types and what to compare, see our secured loans guide.
4. Understand the impact on future borrowing
Remember, a secured loan isn’t isolated—it becomes part of your overall borrowing picture. Even if the monthly payments feel doable, in future you might struggle to get remortgaged or borrow more if lenders think your debt load is too heavy.
5. Understand the risks to your home
This one can’t be understated: you’re putting your home on the line. If something goes wrong and payments slip, the lender could repossess. So go in with confidence that you can handle the repayments, and absolutely don’t borrow more than you actually need.
6. Ask how flexible the loan is
Flexibility matters. Can you make extra payments or pay it off early without being hit by a big fee? What if you want to tweak your payment date? Or face a short-term cash squeeze? Choose a loan that bends a bit when life does.
7. Know how your credit score will be affected
Heads up—applying for a secured loan will show up on your credit file. How it affects you really depends on how the lender reports it—some treat it like a mortgage, others like a regular personal loan. That distinction can make a difference, so factor it in. You can see all your secured loan options here to get a better feel for the market. You can explore all secured loan options here to understand the wider market.
8. Ask what happens if you move house
If you’re thinking of moving soon, make sure you know what happens with the loan. Do you have to pay it all back when you sell? Can the loan move with you to your new place? Little details like that can spiral into a big problem if you didn’t plan ahead.
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 long does it take to get approved?
The approval process for secured loans usually takes between 1 and 3 weeks. This can vary depending on the lender, how quickly you provide necessary documents, and whether your application is straightforward. Having proof of income, mortgage statements, and ID ready can speed things up.
Do I need to tell my mortgage provider?
Yes, if you're taking out a second charge loan, your main mortgage lender will be informed - even if you don't need their permission. The second loan sits behind your main mortgage, so lenders need to be aware of the new arrangement.
Is it better to use a broker or go direct?
Using a broker can save you time and potentially get you better deals - especially if you have bad credit or complex finances. Just make sure you understand how the broker gets paid - some charge a fee, while others earn commission from the lender.
What can I use the money for?
You can use a secured loan for a wide range of purposes - home improvements, debt consolidation, buying a car, funding a wedding, or even helping your children with a deposit. As long as the lender is happy with the reason and you meet their criteria, it's pretty flexibility.
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