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Secured Loans
The rate you're offered depends on your credit profile, how much equity you have in your property, and the loan term you choose. We compare options across our panel of lenders to find rates that match your circumstances.
Secured loan rates in the UK are priced individually for each applicant rather than set at a single fixed rate. Lenders combine several factors to decide what to offer you:
Secured loan rates are generally higher than mortgage rates, because a secured loan sits behind your mortgage as a second charge on your property. They're typically lower than unsecured personal loan rates, because the security you offer reduces the lender's risk.
Because rates change frequently and depend heavily on individual circumstances, the only reliable way to find out what you'd be offered is to speak to an advisor who can check your eligibility across a range of lenders.
Secured loan rates in the UK are not one-size-fits-all. Every lender prices its own products, and the rate you're offered depends primarily on your credit score, how much equity you have in your property, and the loan term you choose.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Having sufficient equity in your property is essential for approval, and it can also help you access better rates and larger loan amounts. Secured loans let you borrow larger amounts than most unsecured loans, usually with longer repayment terms. Common uses include home improvements, major purchases, business investment, education costs, and debt consolidation.
The interest rate you're offered depends heavily on your credit history. Lenders use your credit profile to assess risk and price their products accordingly.
Well-qualified borrowers with strong equity and a clean credit history typically access the most competitive rates on the market. Rates for secured loans are usually lower than equivalent unsecured borrowing, because the property acting as collateral reduces the lender's risk.
The gap between the rates available to excellent and poor credit profiles can be significant, often adding hundreds of pounds to monthly repayments and tens of thousands of pounds over the full term of the loan. If you're not sure which tier you're likely to fall into, speak to an advisor for a personalised illustration based on your circumstances.
Your credit score matters, but it isn't the whole picture. Lenders also weigh your loan-to-value ratio and affordability, so someone with a fair credit score but plenty of equity can sometimes access better rates than they expect.
Not sure what you'd be offered?
Our advisors compare rates from a wide range of lenders, so you can see what's realistically available before you apply.
A secured loan - also called a homeowner loan or second charge mortgage - lets you borrow money using your property as security. The "secured" part means your home is at risk if you can't keep up repayments. Unsecured loans, by contrast, don't require any collateral and are typically available for smaller amounts, which makes them more accessible if you don't own a property or other valuable asset.
The main difference is that a secured loan requires you to pledge a valuable asset, such as your home, while an unsecured loan is based solely on your creditworthiness. Not all lenders offer secured loans or accept every type of collateral, so it's worth checking individual lender requirements before applying.
Secured loan rates work differently from your mortgage rate. Your mortgage holds "first charge" on your property, meaning if you default, that lender is repaid first. A secured loan creates a "second charge", which is slightly higher risk for the lender. This is why secured loan rates tend to sit above mortgage rates, but typically below unsecured personal loan rates.
The rate you're offered reflects how risky the lender considers your application. Lower risk - better credit, more equity, stable income - generally means a lower rate. Higher risk means a higher rate, but you can often still access finance when a personal loan might not be available.
Most secured loans in the UK use a fixed rate for an initial period, typically two to five years, before reverting to a variable rate. Some lenders offer a fixed rate for the entire term, while others use a variable rate from the start.
Secured lenders assess applications based on factors including your property's value, your financial stability, and the security you offer. Understanding what drives secured loan rates can help you improve your position before applying. Here are the main factors lenders assess.
Your credit profile has the biggest impact on your rate. Lenders check your credit file with agencies including Experian, Equifax, and TransUnion to see how you've handled debt in the past. They'll also review your bank statements to verify your income and assess your ability to manage repayments.
They're looking for:
A single late payment from several years ago is unlikely to affect your rate much. Recent missed payments, active debt agreements, or judgments registered in the last two years can have a much bigger impact.
Your loan-to-value ratio (LTV) compares your total borrowing against your property's value, using your current mortgage balance plus any additional borrowing. A lower LTV means more equity protecting the lender, which typically means better rates.
Most lenders cap borrowing at 85% LTV. For example, if your property is worth £300,000 and your mortgage balance is £180,000, you have £120,000 in equity - 40% of the property's value. Adding a £50,000 secured loan would bring your total borrowing to £230,000, or around 77% LTV, which sits within most lenders' criteria.
The amount you borrow and how long you take to repay it both affect your rate. Secured loans typically offer maximum loan amounts of up to £500,000, with repayment terms ranging from around 3 to 30 years. The specific amount, term, and rate you're offered depend on your application and the lender's eligibility criteria.
Some lenders offer better rates on larger loans because setup costs are spread over more substantial lending, while very small loans can attract slightly higher rates because there's less interest to cover the lender's processing costs. A longer repayment term can reduce your monthly payments but means paying more interest over the life of the loan, so it's worth weighing the term carefully rather than focusing on the monthly figure alone.
Affordability matters more than many borrowers expect. Lenders must assess whether you can maintain repayments under Financial Conduct Authority rules for second charge mortgages (MCOB 11.6). They'll stress-test your application to check you could still afford repayments if rates increased.
You'll usually need to provide recent bank statements and proof of income, along with evidence of property ownership, to verify your financial situation. Self-employed applicants often face a slightly higher rate because income verification is more complex - providing two or three years of accounts rather than one can sometimes help.
Standard properties - houses, flats, and bungalows in good condition - qualify for the widest range of lenders and the best rates. Non-standard properties can face limitations:
If you're close to the edge of a loan-to-value band, reducing the amount you borrow by even a small amount can sometimes move you into a better rate tier.
Rate factors
Secured loan rates don't stay still. They move with the wider lending market, so it helps to understand what drives those changes.
Secured loan rates are influenced by the Bank of England base rate, though they don't move in lockstep with it. When the base rate falls, lenders typically pass some of that reduction on to new secured loan customers over time, though the pace and scale vary between lenders. For the latest base rate, see the Bank of England's official bank rate data.
The secured lending market has seen new entrants and increased competition in recent years, which has generally helped push rates down, particularly for borrowers with excellent credit.
Even when base rates fall, lenders remain cautious about higher-risk applications during uncertain economic periods, which tends to keep the gap between prime and adverse credit rates relatively wide.
People often ask whether they should wait for rates to fall further. The honest answer is that nobody can predict rate movements with certainty. What we can tell you is this:
If rates do fall significantly after you take out a secured loan, refinancing is usually an option, subject to any early repayment charges on your existing loan.
Comparing secured loans means looking beyond the headline rate to the fees and overall cost too. Not every lender, including some mortgage lenders, offers secured loans or accepts every type of collateral, so it's worth checking individual lender requirements before applying.
Different types of lenders take different approaches to pricing and risk. Here's what to expect from each.
Major banks offer secured loans, but their appetite varies. Many also act as mortgage lenders, and their own policies - such as early redemption penalties - can affect your options if you already hold a mortgage with them.
Specialist lenders focus specifically on second charge lending. They assess the value of your collateral and your financial stability to determine approval and the amount you can borrow.
Some building societies offer secured loans, often with a member-owned approach to underwriting.
Digital-first lenders have entered the secured loan market with streamlined application processes.
Always compare rates, fees, and terms across different lender types to get a full picture of the most cost-effective option for you.
Where to compare
The headline rate isn't the only cost to consider. Secured loans often involve setup fees, including arrangement, valuation, legal, and broker fees, which all affect the overall cost. A loan with a lower rate but higher fees can sometimes cost more overall than one with a higher rate and no fees.
Broker fees are typically calculated as a percentage of the net loan amount - the amount you borrow after deducting any fees or charges. If you're considering debt consolidation, remember to include other borrowing, such as credit cards and car finance, in your affordability calculations to get a true picture of your remaining income and eligibility.
Most secured loans come with one or more of the following:
For a typical £40,000 secured loan, expect total setup costs of roughly £500 to £2,000.
A loan with a slightly higher rate but no arrangement fee can sometimes work out similar in cost, or even cheaper overall, than a loan with a lower rate and a large upfront fee. When comparing offers, look at the total amount repayable - sometimes shown as the APRC - rather than the headline rate alone.
If you might repay your secured loan early - through selling your home, remortgaging, or coming into money - check the early repayment charge (ERC) structure:
On a £40,000 loan, a 2% ERC means paying £800 to exit early. If there's any chance you'll repay ahead of schedule, factor this into your comparison.
Standard rate tables don't tell the whole story. Here's what tends to affect your rate if your situation is more complex.
If you're self-employed, expect a slightly higher rate than an employed equivalent, reflecting the extra verification work lenders carry out. To improve your position:
Some specialist lenders offer competitive rates for established self-employed borrowers, as they understand this segment better than generalist lenders.
If you have credit issues, your rate depends heavily on what they are and how recent they are:
If you have a poor credit history, the amount you can borrow and the number of lenders willing to help may be limited, but secured loans are often still accessible even with adverse credit. Lenders tend to focus more on your current circumstances than historical issues, particularly if you can show improved financial behaviour.
Age affects secured loan availability and rates:
For example, a standard lender might only offer a seven-year term to someone in their late sixties, while a specialist lender could offer a longer term at a slightly higher rate - sometimes resulting in lower monthly payments overall.
If you're looking to borrow near the maximum loan-to-value most lenders allow, expect to pay a premium:
If possible, reducing your borrowing to stay at a lower LTV can unlock a meaningfully better rate.
Before you apply
Check your credit file
Get copies from Experian, Equifax, and TransUnion. Look for errors, such as the wrong address or accounts that aren't yours, and dispute any mistakes. This can take up to 28 days, so start early.
Pay down existing debt where you can
Reducing your credit card balances improves your credit utilisation ratio, which can move you into a better rate band.
Avoid new credit applications
Each application adds a search to your file, and multiple searches in a short period can suggest financial difficulty. Try to avoid applying for other credit for three to six months before applying.
Stay on the electoral roll
Being registered at your address is a simple way to improve your credit profile, since lenders use it to verify your identity and address stability.
Think carefully about the loan structure you choose
A shorter term, or borrowing a little less, can each help you access a better rate - see the section below for more detail.
Based on our experience arranging secured loans, here are practical steps that can improve the rate you're offered. Comparing deals from multiple lenders, and looking at interest rates, fees, and the APRC together, is the best way to find the most cost-effective option for your circumstances.
A shorter term usually means higher monthly payments, but you'll pay substantially less interest overall and may qualify for a slightly better rate. Choosing a longer repayment period can lower your monthly payments, but you'll pay more in total interest over the life of the loan, so it's worth weighing the term carefully rather than focusing on the monthly figure alone.
Only borrow what you need - a lower loan amount usually means a lower LTV, which can mean a better rate and a lower total interest cost. If you want flexibility in case rates fall further, a shorter fixed period gives you that option. If you want certainty, a longer fixed term locks in your current rate.
Using a broker like Money Saving Advisors gives you access to a wide range of lenders through a single application, rather than approaching lenders individually. We'll talk you through:
Access expert advice with no pressure to proceed.
Finding a good rate doesn't remove the risks of secured lending. If you don't keep up repayments, the lender can ultimately take legal action to repossess your home, and defaulting on any finance will also harm your credit score, making it harder to get credit in the future. Repossession is generally a last resort, and lenders may be willing to negotiate if you're struggling with repayments, but they do have the legal right to take possession of your home to recover what they're owed if you don't pay.
This isn't just a warning - it's the fundamental trade-off of a secured loan. If you can't maintain repayments, the lender can ultimately force the sale of your property to recover their money. This risk exists throughout the entire loan term.
Before committing, it's worth honestly asking yourself:
Even at a good rate, secured loans cost significant interest over their term. Make sure whatever you're using the money for genuinely justifies this cost.
Taking out a secured loan reduces your home equity. If property prices fall, or you need to move, you might have less flexibility than you expect. In extreme cases of negative equity, you could face a shortfall when selling.
If your circumstances change and you want to repay early, you may face early repayment charges. Check these before committing, especially if there's any chance you might sell, remortgage, or come into money.
If you're worried about keeping up with any of your repayments, free and impartial guidance is available from MoneyHelper on 0800 138 7777.
Common questions
The rate you're offered depends on your credit score, loan-to-value ratio, and overall circumstances. Borrowers with excellent credit, a low loan-to-value ratio, and straightforward circumstances typically access the most competitive rates on the market. Speak to an advisor to find out what's realistic for your situation.
Yes, secured loans are often more accessible than unsecured products for people with adverse credit histories, because the property security reduces the lender's risk. Specialist lenders will consider applications with past missed payments, defaults, or even a debt management plan, though rates are typically higher than for those with a clean credit history. Speak to an advisor about the options available for your circumstances.
This depends on your property equity, income, and affordability. Most lenders offer between £10,000 and £500,000. Your maximum is typically 80-90% of your property's value minus any existing mortgage, subject to you being able to afford the repayments.
Initial eligibility checks use a soft search that doesn't affect your credit score. A hard search only appears on your credit file if you go ahead with a full application. Multiple hard searches in a short space of time can temporarily lower your score, which is one reason it helps to use a broker who can check eligibility across several lenders with a single soft search.
From application to receiving funds typically takes three to six weeks. Initial decisions often come within 24-48 hours, but valuation, underwriting, and legal work add time. Complex cases, such as non-standard properties, self-employment, or adverse credit, may take six to eight weeks.
Both options exist. Most secured loans offer an initial fixed rate period, typically two to five years, before reverting to a variable rate. Fully fixed rates for the entire term are available from some lenders. Variable rate loans track a reference rate, usually the Bank of England base rate, plus a margin.
Possibly, and it's worth comparing. Remortgaging rolls your existing mortgage and additional borrowing into one loan, potentially at a lower overall rate. But it means leaving your current mortgage deal, which could trigger early repayment charges, and if your circumstances have changed since your original mortgage, you might not qualify for competitive remortgage rates. A secured loan keeps your existing mortgage intact.
They're the same thing. 'Secured loan', 'second charge mortgage', and 'homeowner loan' all refer to borrowing secured against your property that sits alongside your existing mortgage. The terminology varies, but the product is identical.
Yes. Lenders assess affordability, credit history, property type, and other factors. Common reasons for decline include insufficient income to support repayments, too much existing debt, a property that doesn't meet lending criteria, or very recent adverse credit. Using a broker helps identify lenders most likely to accept your application.
No. The loan is secured against equity you already have in your property, not against additional funds you provide.
Secured loans typically charge a lower rate than unsecured personal loans, because the property security reduces the lender's risk. The trade-off is the risk to your home. Unlike a secured loan, an unsecured loan doesn't require collateral, which makes it more accessible for some borrowers but usually results in a higher rate and a lower maximum loan amount. Eligibility for unsecured loans is often based solely on creditworthiness, whereas secured loans may be available to those with lower credit scores because of the added security for the lender.
Some lenders offer interest-only secured loans, but they're less common than repayment loans. You'll need a clear repayment strategy for the capital, usually the sale of a property or other assets. Rates are often similar to repayment loans, but eligibility criteria are typically stricter.
The loan must be repaid from the sale proceeds. If you're within an early repayment charge period, you'll pay that too. If your sale price doesn't cover your mortgage plus secured loan, which is rare but possible in a property price downturn, you'd still owe the shortfall.
Most secured loans allow overpayments, typically up to 10% of the balance per year without triggering early repayment charges. Overpaying reduces your outstanding balance, cutting total interest and potentially shortening your term. Check the specific terms of any loan offer.
Extending your mortgage term spreads payments over a longer period and may seem cheaper monthly. But you'll pay interest for more years on your entire mortgage, not just the additional borrowing. A secured loan keeps your original mortgage intact and only charges interest on the new borrowing. The right choice depends on your existing mortgage rate, remaining term, and the rates available for each option.
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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.
