Buying a Home
Remortgaging
Landlord
Specialist
Secured Loans
Debt Consolidation
Conveyancing
Finding a Solicitor
Secured Loans
Secured loans use your home as security to unlock larger amounts and longer terms. Personal loans skip the collateral but usually cap out at £25,000. Here's how they compare, and which one fits your circumstances.
Neither option is universally better. A secured loan uses your home as collateral, which typically allows for larger amounts (from around £5,000 up to £500,000 or more), longer terms (3 to 30 years), and more flexibility if your credit history isn't perfect. A personal loan doesn't put your property at risk, is usually faster to arrange, but is generally limited to £25,000 or under and works best with a good credit score.
The right choice depends on how much you need, how long you want to repay over, your credit profile, and how comfortable you are putting your home at risk. Because both loan types carry real financial consequences if repayments aren't kept up, it's worth speaking to an advisor who can compare a wide range of lenders against your specific circumstances.
Choosing between a secured loan vs personal loan is one of the most important borrowing decisions UK homeowners face. Both let you borrow a lump sum of money, but they work very differently, carry different risks, and suit different situations.
There's no universally better option. The right choice depends on how much you need to borrow, your credit history, how long you want to repay over, and how comfortable you are putting your property at risk.
Quick answer: secured loans tend to suit larger amounts, longer terms, or applicants with poor credit and enough home equity. Personal loans are typically faster to arrange, carry no risk to your property, and suit smaller amounts with good credit.
Secured loans are backed by an asset, usually your home, which allows lenders to offer larger amounts and longer terms than they would for unsecured borrowing. Because the lender has security if things go wrong, they can also be more flexible about your credit history.
Personal loans win on speed and simplicity for smaller amounts. Secured loans can offer access to larger sums, longer terms and lower monthly repayments for those who can provide collateral, but putting your home on the line demands careful thought.
A secured loan, sometimes called a homeowner loan, secured personal loan or second charge mortgage, lets you borrow money using your property as collateral. The lender places a legal charge on your home, sitting behind your main mortgage. If you don't keep up repayments, the lender can ultimately apply to the court for possession of your property to recover what's owed.
When you apply for a secured loan, the lender looks at the equity in your property - the difference between what your home is worth and what you still owe on your mortgage. For example, if your property is valued at £300,000 and your outstanding mortgage is £180,000, you have £120,000 in equity.
Most secured loan lenders cap total borrowing at 75-85% loan-to-value (LTV), meaning your mortgage plus the new loan can't exceed this percentage of your home's value. Using the example above, if a lender allows 80% LTV:
The lender also checks affordability based on your income, existing debts and living expenses before approving any amount.
Secured loans tend to work best for homeowners who:
The loan-to-value cap catches a lot of people out. Lenders look at your mortgage balance and the new loan together, not just the new loan on its own. If you're close to your lender's maximum LTV, get a proper valuation before you plan how you'll spend the money.
A personal loan, also called an unsecured loan, lets you borrow a fixed amount without putting up any collateral. The lender assesses your creditworthiness based on your income, existing debts and credit history alone. If you don't repay, the lender can pursue you through debt collection and the courts, but they can't automatically take your property.
When you apply for a personal loan, lenders run a credit check and verify your income, then use this to decide whether to approve you and what rate to offer. The rate you see advertised (the representative rate) is what at least 51% of successful applicants receive - you might be offered a higher or lower rate depending on your circumstances.
Once approved, the lender transfers the full loan amount to your bank account, often within 24-48 hours. You then repay in fixed monthly instalments over the agreed term, with each payment covering both capital and interest.
Personal loans tend to work best for people who:
Compare your options
An advisor can talk through your borrowing amount, credit history and timeline, and compare a wide range of lenders on your behalf.
Now you understand how each loan type works, here's how they compare directly across the factors that matter most when making a borrowing decision. Both secured and personal loans require you to meet the repayments and factor these into your budget.
It's tempting to compare loans purely on their headline interest rate, but the total cost depends on the rate, the length of the term, and any setup fees combined.
A longer-term secured loan often has a lower monthly payment than a shorter-term personal loan for the same amount, simply because the borrowing is spread over more years. But a longer term usually means paying more interest overall, even where the rate itself is competitive. Setup costs matter too: personal loans rarely charge arrangement, valuation or legal fees, while secured loans often do.
Compared over the exact same term, a personal loan is often the cheaper option once fees are factored in, because it typically doesn't carry the same setup costs. A secured loan tends to become the better value option when you need a longer term to bring your monthly payment down, or when you can't qualify for a competitive personal loan rate. Because the true cost depends on your amount, term and credit profile, ask an advisor to compare like-for-like quotes across both loan types before deciding.
Lenders assess your overall financial profile, including your income, credit score and other debts, when reviewing your application. This helps determine your eligibility, rate and repayment term.
Who finds approval easier: secured loans are accessible to a wider range of borrowers because the collateral reduces the lender's risk. If you've had credit difficulties in the past six years, you may find it easier to get approved for a secured loan than an unsecured one - but you still need to own property with sufficient equity.
The risk profiles of these two loan types differ substantially.
Secured loan risks:
Personal loan risks:
Risk winner: personal loans are less risky in the sense that your home isn't at stake. But neither loan type is risk-free to default on - both carry serious consequences.
Secured loans make sense in specific circumstances. Here are the situations where they genuinely offer an advantage.
Personal loans max out around £25,000-£50,000, and the highest amounts are only available to applicants with excellent credit. If you need £40,000 for a major home extension or £60,000 to consolidate substantial debts, a secured loan is often your only realistic option.
Example: Sarah, a teacher from Leeds, needed £45,000 for a loft conversion. Her property was worth £280,000 with a £165,000 mortgage, giving her £115,000 in equity. With a fair credit score, she couldn't qualify for a personal loan of that size. She took out a secured loan over a 15-year term, which kept her monthly payments manageable within her budget.
If you have defaults, missed payments or a thin credit file, personal loan rates become expensive or unavailable altogether. Secured loans remain more accessible because the lender has your property as security.
Example: Mark had a default from four years ago and a below-average credit score. His personal loan applications were repeatedly declined. Through a specialist secured lender, he borrowed £25,000 over a 12-year term to consolidate expensive credit card debt. Despite paying a higher rate than a prime borrower would, moving his balances into one secured loan reduced his overall monthly outgoings.
Spreading borrowing over 15-25 years dramatically reduces monthly commitments, even though you'll pay more interest overall. This can be the difference between affordability and financial strain.
Example: James and Helen needed £35,000 but had a limited monthly budget. A shorter-term personal loan would have meant a monthly payment beyond their means. Spreading the borrowing over a much longer secured loan term brought the payment down to a level that worked for their household, even though it cost more in total interest over the loan's lifetime.
If you have a competitive mortgage rate secured before rates rose more widely, remortgaging to release equity would mean losing that rate across your whole mortgage balance. A secured loan sits alongside your mortgage, leaving it untouched.
Example: Emma had a competitive fixed mortgage rate. To access £50,000 for home improvements, remortgaging would have meant losing that rate across her entire mortgage balance. Instead, she took out a secured loan that sat alongside her existing mortgage. Even though the secured loan's own rate was higher, protecting the rate on her much larger mortgage balance meant she came out ahead overall.
At a glance
You need to borrow more than £25,000
Personal loans rarely stretch this far, so a secured loan may be your only realistic option for larger amounts.
Your credit score is below 650
Secured lenders weigh your property equity alongside your credit history, so approval is often more achievable.
You need a lower monthly payment
Spreading the loan over a longer term brings the monthly cost down, even if you pay more interest overall.
You want to preserve your mortgage rate
A secured loan sits alongside your mortgage, so you don't have to remortgage onto new terms to release equity.
You're comfortable with the risk
You can reliably afford the payments and accept that your property is used as security.
Personal loans win out in different situations. Here's when they tend to make more sense than secured borrowing.
Secured loans involve property valuations, legal work and underwriting that typically take 2-4 weeks. Personal loans can fund within 24-48 hours. If time matters, unsecured borrowing usually wins.
Example: Tom's car broke down and he needed £8,000 for a replacement to get to work. He couldn't wait weeks for a secured loan process, so he applied for a personal loan online in around 15 minutes, with money in his account the next morning.
With a strong credit score, you're likely to qualify for personal loan rates that match or beat secured loan rates, without the fees or property risk. The maths tends to favour unsecured borrowing for smaller amounts.
Example: Lisa wanted £15,000 for a new bathroom. With an excellent credit score, she qualified for a competitive personal loan over a four-year term. A secured loan for the same amount would have added setup costs on top of similar interest costs, without any real benefit for a loan this size.
Some people would simply rather not involve their home in a borrowing decision. Knowing that missed payments won't lead to repossession has genuine value.
Example: After being made redundant, David was cautious about putting his home on the line. He chose a £12,000 personal loan over a secured option, despite a slightly higher rate, valuing the certainty that his family home wasn't at risk regardless of what happened with his employment.
Personal loans typically have no early repayment charges, or only charge one or two months' interest. Secured loans often carry a penalty period of 3-5 years, with charges of a percentage of the balance.
Example: Catherine borrowed £20,000, planning to repay it once her house sale completed eight months later. A personal loan let her clear the debt with a minimal penalty. A secured loan would have carried a meaningful early repayment charge for exiting so soon into the term.
At a glance
Still unsure which option suits you? Your circumstances, including your financial situation, credit history and what you need the loan for, should guide your choice. Work through this framework.
Work out what you can realistically pay each month. If you need a longer term to make payments affordable, a secured loan offers that flexibility. If you can manage shorter-term payments, a personal loan is likely to cost less overall.
Be honest with yourself. If the thought of your home being at risk causes you anxiety, that stress has a real cost. Sometimes paying more to avoid that risk is the right choice for you.
Both loan types have costs beyond the headline interest rate. The lender sets the terms, fees and repayment schedule, so it's worth reviewing these carefully when comparing options. For secured loans, the application process is generally more involved and can include valuation and legal costs.
For borrowing over the same term, a personal loan often ends up cheaper once you include setup costs, simply because it usually doesn't carry arrangement, valuation or legal fees. A secured loan tends to make more financial sense when you need a longer term to bring the monthly payment down, or when you can't access a competitive personal loan rate. To see how the numbers compare for your circumstances, ask an advisor for a like-for-like comparison of both options.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Before taking out a secured loan, ask yourself honestly:
If the answer to any of these is "no" or "I'm not sure", think carefully before proceeding with secured borrowing.
When you take out a secured loan, the lender registers a legal charge against your property at the Land Registry. If you default, they can pursue repossession through the courts. This isn't just fine print - it's a genuine risk that affects real families every year. The process typically follows these stages:
This process takes months, not days. Lenders generally prefer to find a solution rather than repossess, but the risk is real and shouldn't be dismissed.
Defaulting on a personal loan is still serious, even without property risk:
Neither option is consequence-free if you can't repay.
If you're struggling with repayments or finding the situation overwhelming, MoneyHelper offers free, independent guidance. Visit moneyhelper.org.uk or call 0800 138 7777.
If you've decided a secured loan might suit your situation, an advisor can help you find the right option by comparing a wide range of specialist lenders against your circumstances.
If you're borrowing under £25,000 with decent credit, it's still worth speaking to an advisor to compare a personal loan against a secured loan side by side before you decide.
How it works
Complete a short enquiry
Tell us about the amount you need, your property, and your circumstances.
We run a soft credit check
This won't affect your credit score and helps us understand your options.
Your circumstances are reviewed
An advisor looks at your situation and searches for suitable lenders.
You receive a comparison
We talk you through the available options, explaining how they differ.
We handle the application
If you decide to proceed, we manage the process and keep you updated.
Common questions
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.
It depends on the amount, term and your credit profile. For smaller amounts with good credit, a personal loan typically costs less because it has no setup fees. For larger amounts or poorer credit, a secured loan can offer a lower rate that offsets its fees. The only way to know for certain is to compare quotes for your specific situation.
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.
Yes, owning property doesn't prevent you from getting a personal loan. Homeowners often have strong credit profiles and stable income, which can make them attractive to unsecured lenders. You simply choose whether to use your property as collateral (a secured loan) or borrow without involving it (a personal loan).
If you're struggling with payments, contact your lender immediately. Financial Conduct Authority regulations require lenders to treat you fairly and explore options before taking action, such as a payment holiday, reduced payments, or a term extension. If arrears continue and no solution can be reached, the lender can apply for a court possession order. This process takes several months and involves a hearing where your circumstances are considered. Repossession is meant to be a last resort, not a first response.
Personal loans can usually be repaid early with no or minimal charges, typically one or two months' interest. Secured loans often carry an early repayment charge during any initial fixed-rate period, commonly a percentage of the outstanding balance. After the fixed period ends, most secured loans can be repaid without penalty. Always check the specific terms before signing.
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.
Yes, both secured and personal loans affect your credit score. The application creates a hard credit check, which can temporarily lower your score. Making payments on time improves your score over time, while missing payments damages it significantly. Whether the loan is secured or unsecured matters less than your payment behaviour.
APR applies to most consumer credit, including secured loans. APRC stands for Annual Percentage Rate of Charge and is the equivalent measure used for mortgages, covering interest and fees across the full mortgage term. For secured loans, APR is the figure to compare between lenders.
Yes. You'll typically need 2-3 years' accounts or SA302 tax calculations, though some lenders accept one year's trading with strong figures. Limited company directors need evidence of salary and dividends drawn, and income assessment methods vary between lenders.
Most lenders offer secured loans from £10,000, with maximums of £500,000 or more. Some specialist providers go as low as £5,000 or as high as £2.5 million for high-value properties.
Both options exist. Fixed rates stay the same for a set period, typically 2-10 years, then usually switch to a variable rate. Variable rates move with market conditions, typically tracking the Bank of England base rate. Fixed rates provide certainty; variable rates offer potential savings if rates fall.
Generally yes. Common uses include home improvements, debt consolidation, major purchases and business investment. Most lenders don't restrict how you spend the money, though some won't lend for certain purposes, such as gambling or speculative investment. Personal loans offer similar flexibility.
Rates vary constantly and depend heavily on individual circumstances. Rather than naming specific lenders, it's worth comparing quotes from multiple providers. Speaking to an advisor who compares a wide range of lenders can help you find options that match your circumstances, which may reveal better terms than approaching a single lender directly.
Most lenders require you to retain 15-25% equity after the loan. So if a lender operates at 80% loan-to-value and your property is worth £250,000, your mortgage plus secured loan can't exceed £200,000. If your mortgage is £150,000, you could potentially borrow up to £50,000. Some specialist lenders allow higher loan-to-value ratios, but these come with higher rates.
What our clients say
Shortly after I spoke with Anna, she was also very helpful and made it effortless and a nice experience.
Had a really good experience regarding arranging a secured loan. They introduced me to a great advisor. Thanks for the help.
For once a loan transaction without stress and complications. Very impressed and highly recommended.
Thrilled to share my exceptional experience with Money Saving Advisors. The website made it incredibly simple and easy to connect with an advisor. They helped me find the best deal on my remortgage and secured a very competitive interest rate!
Great advice and money saved on mortgage.
I have previously declined a loan of the value I needed from various brokers, but this website found me a reputable broker with surprisingly decent rates.
Secured Loans
Compare rates from a wide range of lenders. Our expert advisors will find the right secured loan for your circumstances.
