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Secured Loans
A secured loan lets you fund a home extension by borrowing against the equity in your property, from £10,000 up to £500,000, without disturbing your existing mortgage deal.
Loans for extensions are usually arranged as a secured loan, also called a homeowner loan or second charge mortgage. This means borrowing against the equity in your home, secured alongside your existing mortgage rather than replacing it.
Because the loan is secured against your home, it carries a serious risk if repayments aren't kept up. We're a broker, not a lender, and we compare a wide range of lenders to find options that suit your circumstances. Checking your eligibility won't affect your credit score.
Building an extension is one of the most popular ways to add space to a home, but with costs typically ranging from £30,000 to £100,000 or more, most homeowners need finance to make it happen. Loans for extensions are usually arranged as a secured loan (also called a homeowner loan or second charge mortgage), offering a practical way to fund the project without disturbing your existing mortgage.
A single-storey rear extension typically costs between £40,000 and £70,000, while a double-storey project can easily exceed £100,000 - a sum most homeowners can't cover from savings alone. Secured loans are particularly well suited to extension projects for several reasons.
Unlike unsecured personal loans, which are typically capped at £25,000, secured loans let you borrow from £10,000 up to £500,000 or more, depending on your equity and affordability. This means you can fund even substantial extension projects without piecing together multiple loans.
In our experience helping homeowners finance extensions, most borrow between £30,000 and £80,000 - amounts that match typical project costs and allow for contingencies. We always recommend budgeting 10-15% extra for unexpected costs.
Because your property acts as security, lenders take on less risk than with an unsecured loan, which is often reflected in the rate you're offered. The exact rate depends on your credit profile, your equity, and the lender's own criteria, so it's worth comparing options before committing. Speak to an advisor for current rates based on your circumstances.
Even a modest difference in interest rate can add up to a meaningful amount over a 15 or 20 year term, which is why comparing the total cost of borrowing matters as much as the headline rate.
Secured loans offer terms of up to 25-30 years, allowing you to spread the cost and keep monthly payments affordable. A shorter term means higher monthly payments but less interest paid overall, while a longer term reduces the monthly cost but increases the total interest paid over the life of the loan.
We help customers find the right balance between affordable monthly payments and total cost. For many homeowners, a longer term is a sensible way to keep payments manageable while funding their extension.
If you're on a competitive fixed-rate mortgage, remortgaging to fund an extension means losing that rate and potentially paying early repayment charges of thousands of pounds. A secured loan sits alongside your existing mortgage, leaving it untouched.
This is particularly valuable if you locked in a low rate before recent rate rises and don't want to give it up just to access funds. Remortgaging is still worth considering in some circumstances, since it lets you consolidate your borrowing into one loan, potentially with a new lender, but it means giving up your current deal.
Extension finance
Tell us about your project and we'll compare options from a wide range of lenders to find what's available for your circumstances.
The amount you can borrow depends on three main factors: your available equity, your affordability, and the lender's maximum loan-to-value (LTV) ratio.
Equity is the portion of your property you own outright - the difference between your home's current value and what you owe on your mortgage. Most lenders will let you borrow up to 80-85% of your property's value in total, combining your mortgage and the new secured loan. Some specialist lenders go up to 90-95% LTV, though rates will typically be higher.
Even with £150,000 in equity, you could only borrow £97,500 with an 85% LTV lender in this example.
Having equity doesn't guarantee approval - lenders must confirm you can afford the repayments. They'll assess your income, existing debts, essential living costs, and monthly outgoings, along with your credit history and personal circumstances.
As a general rule, lenders look for your total debt repayments (including your mortgage and the new loan) to be no more than 40-45% of your gross monthly income. This varies by lender, and affordability calculators don't always capture the full picture.
Example: affordability in practice
Sarah earns £4,500 a month with a £1,200 mortgage payment. A lender assessed that a £50,000 secured loan over 15 years was affordable within their criteria, keeping her total housing costs comfortably within their affordability threshold.
Affordability calculators are a starting point, not the final word. If the numbers look tight on paper, speak to an advisor - some lenders take a more flexible view of self-employed income, overtime, or benefits than others.
Beyond equity and income, lenders consider your credit history and score, employment status and income stability, existing debts and credit commitments, the purpose of the loan (extensions are viewed favourably), and your age relative to the loan term.
Self-employed applicants, those with complex income, or homeowners with past credit issues may find some lenders more flexible than others. We work with specialist lenders who assess applications individually rather than relying solely on automated scoring.
Understanding the true cost of borrowing means looking beyond the interest rate to all the costs involved, including fees and how the loan term affects the total you'll repay.
The rate you're offered depends on your credit profile, the amount of equity you have, and the lender's own criteria. Broadly speaking:
These are general guidelines rather than guarantees - your actual rate depends on the loan amount, term, LTV ratio, and your individual circumstances. Speak to an advisor for a personalised illustration.
Beyond interest, factor in these typical fees, and be aware that extra costs can arise during the process.
Always compare the total cost of borrowing, not just the rate. A loan with a slightly higher rate but no arrangement fee can sometimes work out cheaper overall than one with a lower rate and a large upfront fee, especially for smaller loan amounts or shorter terms.
Many homeowners wonder whether to remortgage or take out a secured loan for their extension. Here's how the two typically compare.
When remortgaging makes more sense:
When a secured loan makes more sense:
We regularly help customers compare both scenarios to see which genuinely costs less over time.
A secured loan isn't your only option for funding an extension. Here's how it compares to the alternatives.
Best for: smaller projects under £25,000, or if you want to avoid securing debt against your home.
Personal loans can be arranged quickly and don't put your home at risk. But maximum amounts are typically £25,000, rates are often higher than secured loans, and terms are usually limited to seven or eight years, meaning higher monthly payments. For a £40,000+ extension, you'd likely need multiple loans, which isn't practical.
Best for: borrowing large amounts when your current mortgage deal is ending anyway.
Remortgaging consolidates your borrowing into one loan, potentially with a new lender. Speaking to an advisor can help you compare deals when remortgaging, so you understand the terms on offer. But it takes longer, typically six to twelve weeks, may trigger early repayment charges, and means losing any competitive rate you've locked in. Get an up-to-date valuation of your home before remortgaging so you understand your equity position.
Best for: homeowners happy with their current lender who want simplicity.
A further advance adds borrowing to your existing mortgage without remortgaging. Not all lenders offer this, and rates may be higher than their standard mortgage rates. It's worth asking your current lender, but compare it to secured loan options before deciding.
Best for: very small projects, or paying deposits while waiting for loan funds.
Using credit cards for major building work is risky. Credit card interest rates are typically much higher than secured loans, and carrying large balances damages your credit score. Some homeowners use 0% purchase cards for materials, but this only works for amounts you can clear within the promotional period. One benefit is the protection offered by Section 75 of the Consumer Credit Act, which means you may be able to claim a refund if something goes wrong with a purchase.
Best for: those who can wait and have healthy savings.
If your extension isn't urgent and you have strong savings habits, using your own money avoids borrowing costs entirely. But waiting years while building costs rise may mean paying more overall.
The amount you need depends on your extension type, size, location, and specification. According to industry data, average costs per square metre range from £1,800 to £3,500, depending on location and finish, with London and the South East at the higher end.
Source: industry estimates based on Checkatrade, HomeOwners Alliance, and Homebuilding & Renovating data. Most homeowners we help borrow slightly more than these typical costs to cover fees and a contingency buffer.
Beyond the build itself, budget for architect fees (7-15% of the build cost), a planning application (£206 for householder applications in England), a structural engineer (£500-£1,500), building regulations fees (£500-£1,000), kitchen or bathroom fitting if included, and landscaping to make good your garden afterwards.
Most homeowners we help borrow 10-20% more than their builder's quote to cover these extras and provide a contingency buffer.
Secured loans are available to a wide range of homeowners, though criteria vary by lender.
To apply, you'll typically need to be a UK homeowner aged 18-85 (this varies by lender), have sufficient equity in your property, be able to demonstrate affordability, and have a property that meets the lender's criteria.
Most residential properties are acceptable, including houses, flats (often with restrictions), and bungalows. Some lenders also accept ex-local authority properties, new builds, and properties with non-standard construction.
Self-employed homeowners can get secured loans, though you'll typically need two to three years of accounts or SA302 forms. Some specialist lenders work with one year's trading history or accept contractor income based on day rates.
We regularly help self-employed customers who've been declined elsewhere. The key is matching you with lenders whose criteria suit your income type.
Past credit problems don't automatically rule you out. Specialist lenders consider applications with defaults, county court judgments, debt management plans, and even previous repossession or insolvency, though the more recent and severe the issues, the higher the cost of borrowing is likely to be.
In our experience, the biggest factors are how long ago issues occurred, whether you've maintained payments since, and your current affordability position.
These examples illustrate how secured loans work in practice, and how different circumstances affect the right choice of extension finance. Details have been adjusted for privacy.
Background: Emma and James, both 38, wanted to knock through their small kitchen and dining room to create an open-plan space with bi-fold doors to the garden.
With a combined income of £85,000 and no other debts, affordability was comfortable. Their fixed-rate mortgage had three years left to run, and remortgaging would have meant an early repayment charge of around £7,000. A secured loan let them keep their existing mortgage rate and borrow the extra £60,000 alongside it.
Outcome: by keeping their mortgage rate and avoiding the early repayment charge, a secured loan worked out more cost-effective than remortgaging for their situation. Application to funds released: 22 days. Extension completed: 4 months.
Background: David, 45, and his wife needed two extra bedrooms as their family grew. His credit score was fair after a missed payment on a credit card three years earlier.
Despite his credit history, several specialist lenders were willing to help. David chose a longer term to keep monthly payments manageable, and combined with his existing mortgage, his total housing costs stayed comfortably within his income.
Outcome: application to funds released took 28 days, slightly longer than usual due to manual underwriting for his credit history.
Background: Sarah, 52, a self-employed consultant, wanted to maximise space in her Victorian terrace with a side-return extension and loft conversion.
As a self-employed borrower, Sarah needed a lender comfortable assessing contractor-style income. With three years of accounts showing an average annual income of £95,000, she qualified for a competitive rate over a 15-year term.
Outcome: the extension and loft conversion added an estimated £200,000 or more to her property's value. Application to funds released: 25 days.
In our experience helping homeowners finance extensions, certain mistakes come up repeatedly.
Common pitfalls
Borrowing exactly the builder's quote
Builders' quotes rarely cover everything. Unexpected structural issues, delays, or material price increases can leave you short if you haven't budgeted for contingencies. We recommend borrowing 10-15% more than quoted, even if you hope not to use it. You can often make overpayments to reduce interest if you don't need the extra funds.
Not checking your mortgage terms first
Before applying for a secured loan, check your mortgage's early repayment charges, any restrictions on additional secured borrowing, whether your lender offers a further advance option, and when your current deal ends. Some mortgages have clauses affecting second charges, so it's worth checking this before you apply.
Choosing the cheapest rate without considering fees
A loan with a lower headline rate but higher fees can sometimes cost more overall than one with a slightly higher rate and no fees, especially for smaller amounts or shorter terms. Always compare the total cost of borrowing, not just the rate.
Underestimating how long funds take to arrange
Secured loans typically take three to six weeks from application to receiving funds. If your builder wants a deposit next week, you may need to bridge the gap with savings, cleared as soon as the loan arrives. Plan ahead and start the application process early.
Borrowing more than you can comfortably afford
Just because you qualify for a loan doesn't mean it's a good idea to stretch to the maximum. Consider what happens if interest rates rise on a variable loan, your circumstances change (job loss, illness, or family changes), or you have other unexpected expenses. Aim to borrow within your comfort zone, not at your absolute limit.
Applying for a secured loan is more involved than a personal loan, but an advisor guides you through each step.
How it works
Initial consultation
We discuss your extension plans, financial situation, and preferences. This helps identify suitable lenders from our panel without affecting your credit score.
Soft search and initial offers
Using the information you provide, we run a soft credit check and obtain indicative offers from matching lenders. You'll see potential amounts and terms before committing to a full application.
Full application
Once you've chosen a lender, you submit a full application with supporting documents, including proof of income, bank statements, proof of ID and address, and details of your existing mortgage and property.
Valuation and underwriting
The lender arranges a property valuation, either desktop or a physical inspection. Underwriters review your application, verify information, and make a final lending decision.
Legal completion
A solicitor handles the legal work, registering the second charge against your property. You'll need to sign loan documents and may want independent legal advice.
Funds released
Once the legal work is complete, funds transfer to your nominated account, typically within two to three working days of completion. Most applications complete within three to six weeks in total.
This is the most important point to understand: if you can't keep up repayments, the lender can ultimately repossess your home to recover the debt. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. This risk exists with your mortgage too, but adding a secured loan increases your total secured borrowing.
Before applying, honestly assess whether you can afford the payments now, and if your circumstances were to change. If you're ever worried about keeping up with repayments, speak to your lender as early as possible. You can also get free, independent guidance from MoneyHelper at moneyhelper.org.uk or by phone on 0800 138 7777.
Many secured loans have early repayment charges if you clear the balance ahead of schedule. These typically apply for the first three to five years and are usually based on a percentage of the remaining balance. If you're likely to sell your property or come into money, such as an inheritance or bonus, check the early repayment terms carefully before you commit.
If you choose a variable rate loan, your payments can rise if the Bank of England base rate increases or if the lender changes their pricing. Consider whether you could afford higher payments, or ask your advisor about a fixed rate for certainty.
While extensions generally add value to a home, there's no guarantee your specific project will increase your property's worth by more than it costs. Kitchen extensions and additional bedrooms typically add the most value, but overspending on a modest property or an unusual design may not pay back.
Delays, cost overruns, and disputes with builders are common. Having a contingency in your loan gives you flexibility. Make sure your builder has appropriate insurance and provides a detailed, written contract.
At Money Saving Advisors, we're specialists in secured loans and homeowner lending. Here's what working with us involves.
Our service
We compare a wide range of lenders
With access to specialist lenders, including some you can't approach directly, we find options you might miss by searching alone. Different lenders suit different circumstances, and we know which ones tend to suit different situations.
We handle the complexity
From checking your mortgage's consent requirements to coordinating with solicitors and valuers, we manage the process so you can focus on planning your extension.
We explain everything clearly
Secured loans involve more complexity than standard personal loans. We break down the jargon, explain the true costs, and make sure you understand exactly what you're signing up for before you commit.
We're here throughout
From your first enquiry to funds landing in your account, and beyond if you have questions later, we're available to help.
Next steps
Common questions
Yes, specialist lenders consider applications from homeowners with adverse credit history. You'll likely pay more for borrowing, and the severity and recency of your credit issues affect your options. We work with lenders who assess applications individually rather than declining automatically based on credit scores.
Most secured loans complete within three to six weeks from application. Straightforward cases with desktop valuations can be faster. If you need funds urgently, tell us upfront - we can prioritise lenders with faster turnaround times.
No, but having planning permission (if required) shows lenders your project is viable. Many extensions fall under permitted development rights and don't need permission. Your architect or builder can advise on what consents you need.
Yes, and you have additional options. As well as standard secured loans, you may be eligible for lifetime mortgages or other equity release products. These work differently - typically with no monthly payments, and the loan repaid when you sell your home or pass away. Speak to an advisor about which approach suits your situation.
If the valuation comes in lower than anticipated, the maximum you can borrow reduces, since the loan-to-value calculation is based on the actual value. You may need to reduce your loan amount or look at a lender with more flexible criteria. We've helped many customers navigate valuation challenges.
Some mortgage lenders require consent before you take out a second charge loan, while others don't. Your advisor handles this consent process on your behalf. Most lenders grant consent routinely, though it can add a few days to the timeline.
Usually yes, but early repayment charges may apply during an initial period, typically the first three to five years. After this period, you can usually overpay or clear the balance without penalty. Always check the specific terms of your loan offer.
This is common. Options include using savings temporarily and clearing them once funds arrive, paying by credit card and clearing the balance immediately, or asking the builder to wait. Starting your application early helps minimise delays like this.
Essentially, yes. A secured loan is technically a second charge mortgage - a second mortgage that sits behind your main mortgage. The terms are often used interchangeably.
This varies by location, property type, and extension quality. Research by Nationwide Building Society suggests an additional bedroom can add around 12% to a property's value, while a bedroom with an en-suite can add around 23%. A quality kitchen extension typically adds value too, but overspending on a modest property may not pay back fully.
Yes, many homeowners combine extension funding with debt consolidation, a new car, or other purposes. The loan amount just needs to be affordable and within your available equity. Be careful about rolling short-term debts into a 15-20 year loan, though, as you may pay far more in interest overall.
Self-employed applicants can access secured loans, though you'll typically need to provide two or three years of accounts or tax returns to verify your income. Some lenders are more flexible with self-employed applicants than others, and we work with lenders who understand contractor, freelancer, and business owner income patterns.
No, lenders differ significantly in their maximum loan-to-value ratios, income multiples, and risk appetite. One lender might offer £60,000 while another offers £90,000 for the same applicant. We compare a wide range of lenders to find the maximum available to you.
Typically, you'll need proof of income (three months' payslips if employed, two to three years' accounts if self-employed), bank statements (usually three months), proof of ID and address, your mortgage statement showing the current balance, and details of other debts and outgoings.
Initial eligibility checks use a soft search, which doesn't appear on your credit file or affect your score. A full application triggers a hard search, which other lenders can see. Using a broker minimises hard searches, because we only move to a full application with lenders likely to accept you.
What our clients say
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Secured Loans
Compare rates from a wide range of lenders. Our expert advisors will find the right secured loan for your circumstances.
