Can You Get Secured Loans With Little to No Equity? The Truth Revealed

Many homeowners ask if secured loans remain possible with limited home equity. The cost of home improvements ranges from £500 to £50,000 upwards. Getting adequate funding becomes challenging with minimal property equity.

Your borrowing options become significant whether you plan a small renovation or a major home overhaul. The UK’s secured loan providers evaluate your property’s available equity before setting interest rates. Let’s look at an example – a home worth £250,000 with a current mortgage of £150,000 would have £100,000 ‘equity’. The numbers might not always work in your favour. Homeowners need a mortgage and property equity to qualify for a secured house loan. Secured home improvement loans typically range from £10,000 to £500,000, while unsecured options provide between £1,000 and £15,000.

This piece examines securing loans with minimal equity and explores alternative financing options like bridging loans. You’ll learn practical steps that improve approval chances when equity remains limited.

What is equity and why does it matter for secured loans?

Equity shows how much of your property you actually own. It’s the gap between your property’s current market value and any debts secured against it. Learning about equity is a simple necessity to think over secured loans since it affects how much money you can borrow.

How equity is calculated

You can figure out your equity easily:

• Get your property’s current market value (from an estate agent or by checking similar local properties)
• Take away what you still owe on your mortgage and other secured debts
• What’s left is your equity

To name just one example, see a home worth £200,000 with £170,000 left on the mortgage. Your equity would be £30,000, which is 15% of your property’s value. Your equity becomes 100% after paying off your mortgage completely.

Regular mortgage payments and rising property values naturally build your equity. Home improvements can raise your property’s value and boost your equity too.

Why lenders care about equity

Equity is a vital safety cushion for lenders. Lenders look at your loan-to-value (LTV) ratio when you apply for a secured loan on house. This ratio compares your desired loan amount to your property’s value.

Your property’s equity works as collateral. Lenders can recover their money from it if you stop making payments. Banks with strong capital are seen as safer by depositors and investors. Properties with higher equity work the same way with lenders.

Higher equity usually means you can borrow more. Lenders let you borrow up to 80-90% of your equity. That’s why secured loans UK providers take time to check your property’s value and remaining mortgage.

Secured loan vs unsecured loan basics

The main difference between these loans is what backs them. A secured loan uses an asset you own as backing, usually your home. This creates a safety net for lenders – they can sell your property to get their money back if you stop paying.

Unsecured loans (or personal loans) don’t need any assets. Lenders have nothing to claim if you default. This makes these loans riskier from their point of view.

This risk gap creates several practical effects:

• Secured loans come with lower interest rates than unsecured ones
• You get larger amounts with secured loans
• Secured loans give you more time to repay
• You need better credit scores for unsecured loans

Your property’s value compared to your outstanding mortgage – your equity – largely decides how much you can borrow through a secured loan. Secured loans are often more available than unsecured ones, even with lower income or credit issues.

Negative equity happens when your mortgage is higher than your property’s worth. This can really limit your options for secured loans.

Can you get a secured loan with little or no equity?

Lenders look at equity as a vital qualifying factor for secured loans. Your property’s equity directly affects your chances of approval and the loan terms you might get.

Minimum equity requirements

Different lenders have their own equity rules in the secured loans UK market. Most banks set minimum levels before they’ll look at your application:

• You’ll need at least 15% equity in your property with most lenders
• Some specialised lenders might work with lower equity levels
• Your Loan-to-Value (LTV) ratios play a huge role in lending decisions—higher ratios could help you borrow more

The equity you have usually limits how much you can borrow. Let’s say you have £10,000 equity in your home – lenders won’t likely approve secured borrowing above this amount. This makes sense because they need enough collateral if you can’t make your payments.

Banks look at several things besides equity when reviewing your secured loan on house application:

• Your credit score
• How much you earn and can afford
• Why you want to borrow

Your equity remains the backbone of secured lending decisions because it gives lenders the security they need.

What happens if you have no equity?

You can’t get secured loans without equity – it’s that simple. A secured loan needs something to secure it against, and without equity in your property, there’s nothing to use as security.

Want to know if you have equity? Just subtract what you still owe on your mortgage from your property’s current market value. Zero or negative numbers mean you don’t have enough equity for a secured loan.

Homeowners with negative equity face very limited borrowing options. This usually happens when property values drop after purchase or when people haven’t paid much of their high LTV mortgages.

Exceptions and rare cases

Some special cases do exist:

A few specialist lenders might review low equity applications individually. They sometimes look beyond standard requirements and could approve loans even with minimal equity.

Some finance companies market themselves as “low equity loan” providers. These products help newer homeowners who haven’t built up much equity through their mortgage payments yet.

Bridging loans can help if you’re temporarily short on equity. They cost more in interest but offer flexibility during transition periods.

If you have low equity but can handle payments well, you might qualify for second charge mortgages. These work like extra loans secured against your property, just with different lenders than your main mortgage.

People with low equity should look into unsecured borrowing options. Personal loans, credit cards, or overdrafts might work better for you, depending on how much you need and your financial situation.

Alternative options when equity is low

You have several alternative financing options available if traditional secured loans don’t work because of limited equity. These alternatives can help you reach your goals without depending on your property’s equity.

Unsecured personal loans

Secured loans UK providers require collateral, but unsecured personal loans don’t need any. Lenders can’t claim your assets if you stop making payments.

Personal loans give you:

• £1,000 to £15,000 in borrowing amounts
• 1-7 years to repay the loan
• Fixed monthly payments that make budgeting easier

These loans work best for home renovations, car purchases, weddings, or debt consolidation. The interest rates run higher than secured options because lenders take on more risk. Homeowners with poor credit should know that secured loan on house options might give much lower rates than unsecured alternatives, which can go from 40% to 200% APRC.

Credit union loans

Credit unions work as self-help cooperatives where members save together to give each other affordable credit. These unions beat traditional lenders in several ways:

• Interest rates stay capped at 3% monthly
• Lending focuses on community needs with flexible terms
• Poor credit histories often get a second chance

Membership requires a “common bond” with existing members—you might live in the same area, work for the same employer, or belong to the same association. Most credit unions ask members to save money regularly while paying back their loans.

Using a credit card for small projects

Credit cards make sense for home improvements around £1,500 or less. They come with some great perks:

• You might get 0% interest at the start
• Monthly payments can match what you can afford
• Section 75 protects purchases between £100 and £30,000, making card issuers share responsibility with suppliers

Standard interest rates can jump quite high after promotional periods end. The smart move is to clear your balance before any 0% offers run out.

Bridging loans as a short-term solution

Bridging loans help you get by while waiting for other money to come through. These short-term loans usually:

• Start at £10,000 minimum
• Come as “open” (no fixed payback date) or “closed” (fixed payback date)
• Need assets as backup, but not always with high equity

People used these loans to “bridge the gap” between buying a new home and selling their current one. Now they’re popular for property renovations and auction purchases.

Bridging loans cost more than regular financing—lenders charge by the month instead of yearly. Small monthly rate differences can add up fast. A 1% monthly rate equals 12.7% APR, while 2% monthly jumps to 26.8% APR.

Look at all costs and terms carefully to pick the best option for your situation if you’re short on equity.

What lenders look for beyond equity

Lenders look at several key factors besides equity when they process secured loan applications. Your chances of approval go up by a lot if you understand these elements, especially when you have less than ideal equity.

Credit score and history

Your credit profile is the life-blood of secured lending decisions. Secured loans UK providers don’t focus on credit scores as much as unsecured lenders do, but your financial track record still matters.

Your previous financial behaviour helps lenders predict how reliable you’ll be. Better credit scores usually mean lower interest rates and higher approval odds. The good news is secured loans are still available even with imperfect credit:

• Some lenders and brokers focus on helping people with less-than-perfect credit scores
• A large amount of equity can help balance out credit issues
• Lenders might view your application more favourably if you explain one-time credit problems

You should check your credit report through major UK credit reference agencies (Experian, Equifax or TransUnion) before applying. This helps you spot and fix any errors that could affect your score.

Income and affordability checks

The Financial Conduct Authority (FCA) requires lenders to do full affordability assessments. These reviews tell lenders if you can handle loan repayments along with your other financial commitments.

Lenders usually ask for:

• Proof of income (payslips for hired workers, tax documents for self-employed)
• Bank statements that show regular income and spending
• Mortgage statements
• Information about expected income changes
• A detailed breakdown of income and expenses

Most secured loan on house providers set borrowing limits at 6-7 times your yearly income. To cite an instance, a family earning £50,000 might borrow up to £350,000 combined between their mortgage and secured loan.

Regular gambling shows up on bank statements and can spook lenders into declining applications.

Collateral alternatives like vehicles or savings

Some lenders accept other assets as security when home equity isn’t enough. These options include:

• Paid-off vehicles (cars or motorcycles)
• Valuable jewellery items
• Savings or investment accounts
• Other valuable items like artwork

Each lender has their own rules about what collateral they’ll accept. The basic rule is that your collateral must be worth at least as much as the loan.

Most lenders won’t take retirement accounts as security. They also tend to offer just a portion of the collateral’s value instead of the full amount.

Your ability to make consistent repayments without financial strain is what lenders care about most, even with alternative collateral.

How to improve your chances of approval

You can take several steps to improve your chances of getting approved for secured loans. Here’s what you can do to strengthen your application, even with limited equity.

Boosting your credit score

Getting on the electoral roll helps verify your identity and address, which helps your score. Regular, timely payments of bills and credit commitments make a big difference. Your credit report shows late or missed payments for six years. Too many credit applications in a short time can suggest money troubles, so keep them minimal. Look for any mistakes in your credit reports from Experian, Equifax, and TransUnion.

Reducing existing debt

A lower overall debt improves your credit utilisation ratio. Lenders like to see this ratio below 30%. This shows them you manage credit well. Keep your oldest credit accounts open but think about closing unused ones. A stable income makes your application stronger.

Using a loan eligibility checker

Loan eligibility checks use “soft searches” that won’t hurt your credit score. These tools show how likely you are to get approved before you actually apply. Most secured loans UK providers show your approval chances as a percentage. This helps you avoid applications that might get turned down.

Getting quotes from multiple lenders

Different lenders have different acceptance rules. Banks, credit unions, and online lenders each offer unique options. Look at both interest rates and fees when you compare. Specialist brokers can help find the right options, especially if your situation is complex.

Conclusion

Getting a secured loan with limited equity can be tough, but homeowners have several options. Your equity position is the main thing lenders look at when they review secured loan applications. This means you’ll need to look at other ways to get financing or make your application stronger if you don’t have much equity.

You might want to look beyond secured loans. Personal loans without collateral, credit union loans, or credit cards could work better for smaller projects. Bridge loans could be a short-term answer, though they come with higher rates.

Your credit score will make a big difference to getting approved, whatever path you choose. The best way to improve your chances is to work on your credit score, pay down your debts and keep a steady income. Loan eligibility checks are a great way to get a clear picture without hurting your credit score.

Smart borrowers always check offers from several lenders. Each lender has their own rules, especially when it comes to limited equity. This gives you the best shot at good terms even with equity limits.

Secured loans usually offer lower rates and bigger amounts, but they need enough equity as backup. Your money situation and what you need will help you decide if a secured loan makes sense or if you should try something else that fits better right now.

Key Takeaways

Understanding your financing options when equity is limited can help you secure the funding you need for home improvements or other major expenses.

• Most lenders require at least 15% equity in your property for secured loans, making them impossible without sufficient collateral backing.

• Unsecured personal loans (£1,000-£15,000) and credit union loans offer viable alternatives when equity is insufficient for secured borrowing.

• Credit scores, income stability, and debt levels significantly impact approval chances, even when equity requirements are met.

• Using eligibility checkers and comparing multiple lenders increases your chances of finding suitable financing despite limited equity.

• Bridging loans provide short-term solutions for temporary equity shortfalls, though they carry higher monthly interest rates than traditional loans.

When equity falls short, focus on strengthening your overall financial profile through credit score improvements and debt reduction. Alternative financing options like personal loans or credit cards for smaller projects can bridge the gap whilst you build equity through mortgage payments and property value appreciation.

Secured loans let you borrow up to £100,000 or even more. That’s by a lot more than unsecured loans that max out at £50,000. The big difference comes from a simple fact – you need to put up an asset as collateral, which is usually your home.

Putting your property up as security might make you nervous. But secured loans come with some real benefits. The interest rates are lower than what you’d pay for unsecured loans. Lenders are also more likely to say yes to applications they might turn down otherwise. Bridging loans add another option that helps in specific money situations. This piece gets into what secured loans really are, who can get one, and what types you’ll find in 2025. You’ll also learn everything you need to know before you make this big money decision.

What is a secured loan and how does it work?

You put your asset at stake when you take a secured loan. This financial arrangement offers benefits but comes with significant responsibilities. Learning how these loans work will help you make better borrowing decisions.

Definition and key features

A secured loan needs you to pledge an asset—typically your home—as ‘security’ or ‘collateral’ for the borrowed money. This creates a direct connection between your loan and your property. The core principle is simple – lenders can sell your property if you miss your repayments.

Your monthly repayments include the borrowed amount plus interest. Lenders calculate the interest rate as a percentage of your borrowed amount, which can be fixed or variable based on your loan type. These loans are accessible to more people under different names like homeowner loans, home loans or second-charge mortgages. The basic concept remains the same—your property guarantees the loan.

Secured loans let you borrow much larger amounts compared to personal loans. Personal loans usually stop at £25,000-£50,000, while secured options can go up to £100,000 or higher. This makes them a great choice especially when you have major expenses like home improvements or education costs.

How it is different from unsecured loans

The main difference between secured and unsecured borrowing shows up if you can’t repay. Lenders cannot take your assets right away with unsecured loans if you default. However, secured loans give lenders the right to take your pledged asset to get their money back.

Here are more differences:

• Approval requirements: You can get secured loans more easily with poor credit since your collateral reduces the lender’s risk
• Repayment periods: You get longer terms with secured loans—up to 40 years—which means lower monthly payments but more interest overall
• Interest rates: Secured loans often have lower interest rates than unsecured ones because lenders take less risk
• Application process: You need more paperwork for secured loans as lenders check both your finances and your collateral’s value

Why lenders require collateral

Lenders ask for collateral to protect themselves financially. Your asset works as their safety net—they can legally sell it to recover their money if you stop making payments.

This protection helps you get better loan terms. Lenders can give credit to people who might not qualify otherwise, including those with poor credit histories or limited credit records.

The value of your pledged asset plays a big role in your loan application. Unlike unsecured loans that only look at your credit score and financial history, secured lending decisions factor in your asset’s worth. The loan-to-value (LTV) ratio—your loan size compared to your asset’s value—usually determines your borrowing limit.

Using your home as collateral is risky but opens up borrowing options that might not be available otherwise. This is particularly helpful if you have challenging financial circumstances.

Who can apply for a secured loan?

Secured loans are accessible to more people than other financing options. You don’t need perfect credit scores or high income. The most important factor is having enough equity in an asset—usually your home.

Self-employed and freelancers

Working for yourself shouldn’t limit your borrowing choices. You can apply for a secured loan if you’ve been self-employed for at least six months. Some lenders might ask for two to three years of business history. This makes secured borrowing valuable especially when you have a new business or freelance work and can’t get unsecured credit.

Self-employed applicants need to show proof of income through:

• Management accounts and bank statements
• Accountant-certified tax calculations or SA302 forms
• Future income projections from your accountant

Limited company directors can borrow based on their salary and dividends. Some flexible lenders might look at company profits too when they calculate your borrowing amount.

Contract workers often struggle to get loans despite having steady work. The good news is that some lenders understand how contract work operates. They treat these applications like regular employment and focus on steady income rather than permanent contracts.

Retired individuals

Your age won’t stop you from getting a secured loan. Many lenders accept applications from people up to 85 years old. This makes secured loans great for pensioners who want money for home improvements, family gifts, or travel.

Lenders accept both state and private pension income. Most lenders set the maximum working age between 70-75 years. This means a 60-year-old could get a 15-year loan based on current income without showing pension proof.

Loans that go beyond retirement need proof of enough post-retirement income. This could be from pensions, investments, or other sources. Lenders need to know you can keep up with payments throughout the loan.

You can use pension lump sums to pay off secured loans when you retire. Just remember that early repayment charges might apply.

Applicants with poor credit history

The biggest advantage of secured loans is that people with bad credit can get them. These loans are easier to get than personal loans if you have poor credit.

You might qualify even with:

• Mortgage arrears
• County Court Judgments (CCJs)
• Other missed credit payments

The math is simple—your property acts as a safety net that cuts the lender’s risk. This security helps lenders be more flexible about credit history compared to unsecured loans.

Bad credit usually means higher interest rates and fees than someone with good credit would pay. If you share ownership of your home, both owners must apply together and share responsibility for payments.

Sometimes it’s better to improve your credit score first or look at bad-credit credit cards instead of rushing into a secured loan.

Types of secured loans available in 2025

The secured loan market has become one of the most important financial sectors in 2025. UK adults now understand these loans better than ever before. About half of all homeowners now see secured loans as a good way to raise capital.

Homeowner loans

Homeowner loans, sometimes called second charge mortgages, help you realise the potential of your property’s equity without changing your existing mortgage rate. This loan type shows impressive growth. Total secured lending jumped 40% in just two years—from £333m in Q1 2023 to £470m in Q1 2025. Experts predict that more than 42,000 borrowers will take out homeowner loans by year-end, up from 35,706 in 2024. These loans offer bigger amounts than unsecured options, with extended repayment terms and better interest rates.

Secured business loans

Business owners can find great financing options through secured loans in 2025. You can use these assets as collateral:

• Your main residence (with proper consent)
• Commercial property or office space
• Buy-to-let properties or holiday lets
• Land (with or without planning permission)

Secured business loans let you borrow between £100,000 and £5 million, based on your available equity. These loans have become popular among sole traders and small businesses that need to fund expansion, refinance expensive debts, or handle cash flow issues. Lenders often show more flexibility with credit profiles and trading history because these loans have collateral backing.

Bridging loans

Bridging loans work as short-term secured financing that you typically repay within 12 months. The Bridging Trends report from 2024 Q2 shows that 23% of borrowers used these loans to prevent property chain breaks. These loans come in two types:

Open bridging loans have no fixed repayment date, offering flexibility but typically at higher interest rates.

Closed bridging loans feature a predetermined repayment date based on when funds will become available (such as from a property sale), usually at lower interest rates.

You can arrange bridging loans quickly to borrow between £50,000 and £10 million. Lenders usually cap maximum loans at 75% of property value.

Secured personal loans

Secured personal loans use your assets as security and often come with better terms than unsecured options. Homeowners prefer these loans to fund home improvements, pay personal tax bills, cover school fees, or consolidate debts. The market grew by 31% from 2020 to 2024—the highest growth in the mortgage industry. Homeowners unlocked £6.5 billion of housing wealth through secured loans between 2020 and 2024. This represents a 27% increase from the previous five-year period.

Common reasons people use secured loans

People choose secured borrowing for many practical reasons that help them in different life situations. These loans work well for improving property value and managing debts at various life stages.

Home improvements and renovations

Secured loans are perfect for property improvements. Homeowners use them to fund major renovation projects that make their homes better and more valuable. Some popular projects include:

• Loft conversions and extensions
• Kitchen and bathroom refurbishments
• Total property redecoration
• Conservatory additions
• Central heating and plumbing updates

These changes make your home more comfortable now and could boost its sale value later. Research shows that UK residents over 65 prefer home improvement loans more than any other type.

Debt consolidation

Many people use secured loans to consolidate their debts. You can pay off multiple debts with one lump sum and manage just a single monthly payment. This approach helps you:

Make your finances simpler with one fixed monthly payment See your total debt situation clearly Pay less interest with better rates

Here’s a typical example: borrowing £6,000 over 3 years at 6.1% APR means monthly payments of £182.36, with a total repayment of £6,564.86. Secured loans are easier to get for debt consolidation than personal loans, even with bad credit.

Large purchases or family support

These loans help fund big one-off expenses that might be hard to afford otherwise. Common uses include:

Buying motorhomes or vehicles Paying for weddings or dream holidays Helping family members with property deposits

More parents now help their children buy homes. You can borrow against your property to provide deposits for your children or grandchildren, which helps them get better mortgage rates.

Business expansion or investment property upgrades

Business owners can borrow between £100,000 and £5 million to grow their companies, depending on their available equity. They often use the money to:

Buy essential equipment or machinery Renovate and modernise business premises Add space to increase capacity

Property investors use secured loans on buy-to-let properties to grow their portfolio or improve existing properties. These loans might also reduce property income tax since interest payments can offset rental profits.

What to know before applying for secured borrowing

You should know several significant factors that will affect your borrowing experience before you commit to a secured loan. A good understanding of these elements will help you decide if secured borrowing lines up with your financial situation.

Interest rate types: fixed vs variable

The choice between fixed and variable interest rates is a fundamental decision. Fixed rates stay the same throughout an agreed period and give you predictable monthly payments whatever the market does. Variable rates can change based on market conditions, which means your repayments might go up or down.

Each option has distinct advantages:

• Fixed rates give you certainty for budgeting but usually start higher than variable rates
• Variable rates often start lower but might increase if market rates rise

Lenders show rates as APRC (annual percentage rate of charge), which has all interest and charges over the full loan term. A “representative APRC” means 51% or more of customers get this rate or better.

Loan terms and repayment structure

The length of your loan repayment period needs careful thought. Your monthly payments become more affordable when you spread them over a longer period, but you’ll pay more interest overall. Yes, it is possible to get secured loans with terms up to 20-35 years.

You might face early repayment charges if you end the contract before the agreed term. Check these details in your terms and conditions before signing any agreement.

Documents and eligibility checks

Lenders need complete documentation to verify your identity, financial status and property ownership. You’ll need:

• Proof of ID (passport or driving licence)
• Recent utility bills or bank statements (within three months)
• Income verification (payslips or tax returns for self-employed)
• Property ownership evidence (mortgage statement or title deeds)

Most lenders provide eligibility checkers that show your chances of acceptance without affecting your credit score.

Risks of default and repossession

Note that failing to keep up with repayments could mean losing your home. Repossession follows a legal process that has formal notices, court hearings, and possible eviction.

Repossession is the last option lenders want to take. They first try to work out repayment arrangements. Notwithstanding that, a default stays on your credit record for six years and severely affects your future borrowing chances.

Conclusion

Secured loans give you clear advantages in certain borrowing situations. Their higher borrowing limits and lower interest rates make them attractive, especially when you have big expenses like home improvements, debt consolidation, or business expansion. On top of that, these loans are available to more borrowers, including self-employed people, retirees, and those with poor credit histories.

Using your home as collateral needs serious thought. You must review your financial situation and ability to repay carefully. The risks can be severe – missed payments could lead to losing your property.

The secured loan market has changed by a lot in 2025, with options now fitting various needs. You might want a homeowner loan, business financing, bridging loan, or personal borrowing. Learning about each type’s features helps you pick the best option.

Your choice between fixed and variable interest rates will change both your monthly payments and total repayment amounts. The length of your loan term plays a role too. Longer terms mean lower monthly payments but cost more in interest overall.

Secured loans can be great financial tools if you use them wisely. They help you achieve goals that might be out of reach otherwise, particularly if you have few other options. But this availability comes with big responsibilities. You must balance the benefits against the real risk to your home.

Note that secured borrowing is a serious, long-term commitment. Good research, an honest look at your finances, and a clear purpose for borrowing will help you decide if a secured loan lines up with your needs and situation.

Key Takeaways

Secured loans unlock significant borrowing potential by using your home as collateral, offering amounts up to £100,000+ compared to £50,000 maximum for unsecured options.

• Secured loans offer lower interest rates and easier approval for poor credit applicants, but risk property repossession if payments are missed.

• Self-employed individuals, retirees, and those with bad credit can qualify more easily than with unsecured loans due to reduced lender risk.

• Popular uses include home improvements, debt consolidation, and business expansion, with loan terms extending up to 35 years for affordability.

• Choose between fixed rates for payment certainty or variable rates for potentially lower initial costs, but always assess repayment capability thoroughly.

• The secured loan market grew 40% in two years, with over £6.5 billion of housing wealth unlocked between 2020-2024, reflecting increasing popularity.

Whilst secured loans provide valuable access to capital with favourable terms, the fundamental risk remains clear: your home serves as the ultimate guarantee, making careful financial planning essential before proceeding.

What do you do if you can afford to repay a mortgage’s monthly instalments, but can’t scrape the hefty deposit together to put an offer in on the house?

Unfortunately, millions of Brits suffer this very problem every year and, in desperation, choose to give up on their dream of owning their own home.

And who can blame them? After all, saving a mortgage deposit is a challenge, and with housing prices increasing consistently and the cost of living on the rise, you may wonder if you’ll ever be able to get the home of your dreams.

Those who are innovative thinkers may reach this point and wonder if a loan for the deposit of the property is a good idea.

Check Today's Best Rates >

Here’s the deal…

Not all loans are ideal for a mortgage deposit, but certain loan types can be of use in some scenarios.

Of course, you need to investigate each avenue to make sure you’re making the right decision!

The general loan options that can be used for borrowing a mortgage deposit include the following:

• Government equity loans
• Private equity loans
• Unsecured loans

Are Mortgage Deposit Loans Available in the UK?

The good news is that you can apply for a mortgage deposit loan if you have saved a portion of the deposit.

This is usually around 5% of the property’s value.

In this case, some lenders will offer loans that cover up to 25% of the property’s value in the form of an equity loan.

As with all financial commitments, there are pros and cons to keep in mind.

On the upside, by paying a higher deposit thanks to your equity loan, you will reduce your instalments on the mortgage.

But on the downside, there are fees to consider and possibly a more overall interest to pay.

Some lenders may offer unsecured loans that you can use to bolster your deposit, but will require you to have a very stable financial situation with minimal other debts.

Three Steps to Apply for a Mortgage Deposit Loan Online

Step 1: Get Expert Advice from an Experienced Mortgage Broker

With the help of a mortgage broker, you can get unbiased and genuinely helpful advice and guidance.

You can avoid making a financial mistake and find the best route for you.

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Step 2: Process the Deposit Loan Application

If the mortgage expert feels you can go ahead, do so.

How the process plays out will depend on if you are applying for an equity loan or unsecured loan for the deposit of your house.

Step 3: Find the Right Mortgage Lender

Not all mortgage lenders will agree to provide you with a mortgage if they’re aware that your deposit amount is a loan.

This is one of the reasons it is important to consult with an experienced mortgage broker who can advise you on the right course of action and which lenders are the best to approach in your particular situation.

Which Lenders Accept Borrowed House Deposits in the UK?

Not all lenders will accept house deposits that are acquired through a deposit, but you may have the best luck in the following scenarios:

• Privately Funded Equity Loans

These lenders will accept deposits that are partially borrowed: Barclays, Tipton Building Society, Generation Home, and Kensington Mortgages.

• Personal Loans

These lenders will consider financing you if your deposit comes from a personal loan: Norton Home Loans, Saffron, Santander, and Together.

You’ll need to provide all the details of the lender providing you with the deposit and the loan details too.

Having the deposit for your mortgage doesn’t mean you’ll definitely get the mortgage.

Mortgage lenders will consider certain factors before determining your eligibility for a loan, including your age, employment situation, income, and affordability.

Can I Use a Director’s Loan to Pay Towards My Mortgage Deposit?

Owners of limited companies can make a director’s loan. When your business has sufficient profits, you can repay the director’s loan.

Many lenders will allow you to go this route when applying for a mortgage.

There are two ways that a director’s loan can work:

1. Put money into the business and draw it out later
2. Borrow money from the business and pay it back later

Only cash that will be repaid can be used as a mortgage deposit.

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Can I Use My Overdraft Facility or Credit Card to Pay My Mortgage Deposit?

Using your credit card or overdraft isn’t a good idea when trying to pay for a mortgage deposit.

This is because your credit card and overdraft both come with high interest rates, and using such high-interest financing options can be risky.

The UK Government Gives a Helping Hand

If you’re struggling to get your mortgage deposit together, the government has a few schemes that could help you.

These include:

• Standard Shared Ownership – you can buy just a portion and then rent the other portion of the home from the housing association.
• Mortgage Guarantee Scheme – you only need a 5% deposit to get assistance with your home’s deposit.
• Help to Buy – this provides first-time investors equity loans to buy homes that are newly built directly from the builder. Only a 5% deposit is required.

Loans for House Deposits UK Conclusion

If you’re worried about how you will get your mortgage deposit together, keep in mind that there are several options for you to consider.

You could take out an equity loan, opt for an unsecured personal loan, or even a director’s loan.

Alternatively, the UK government offers several schemes that could help you get a roof over your head that you can call your own without breaking the bank.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Before we delve into how long a secured loan application takes, it’s worth reviewing precisely what it is.

A secured loan is one that requires you to provide an asset to avail of the loan.

In simple terms, you need to offer collateral to secure the loan. Some of the most common types of secured loans are home loans and car loans.

The borrower must pledge the house or car that he is purchasing as collateral.

If the loan repayments are not made, the lender has the power to repossess the collateral and then sell it to cover any losses.

Since this type of loan is less risky from the lender’s viewpoint, secured loans are the best way to obtain larger loan amounts.

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How long does it take to get a secured loan?

Getting your secured loan request approved typically takes around two to four weeks. However, the duration varies from lender to lender and depends on various factors.

For example, your own administration organisation is a factor that will determine how fast you will receive a decision since you will need to supply different documents.

Another factor is whether the asset you are using as security needs to be re-evaluated.

An evaluation helps the lender decide how much they are willing to offer. However, re-evaluations take time and can extend your application time.

Once the loan is approved, you should receive your funds within a couple of working days. Some lenders deposit the money into your account the same day as you get your loan approved notice.

While some secured loans are completed faster than others, secured loans typically take longer than personal loans because of the extra work involved in securing a loan against an asset.

For instance, lenders may require checks on the property or a surveyor to come and value the property for a full report. Any reviews that need further critique will also cause further delay to the loan application.

Fortunately, you can speed up your loan approval process. Keep reading below to find out.

What details will I need to provide to get a secured loan?

• Proof of identity (passport, driver’s license).
• Proof of employment status (pay-slip, accountant’s details or SA302).
• Proof of income (pay-slip, bank statement, accountant’s details or SA302).
• Proof of ownership of property/residential address (mortgage/utility bill).

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Ways to speed up your secured loan approval

Do Your Research

When shopping for a secured loan, researching the different online products and rates is essential.

Some lenders operate under strict criteria, while others lend even to people with poor credit.

Therefore, if you don’t have a good credit score, you should avoid lenders who don’t loan to people with poor credit.

Also, lenders vary in the amount they allow you to borrow and the time you can take to repay the loan.

For example, some offer secured loans for five years, while others allow up to 35 years. Once you know which type of lender you need, you can save yourself some hassle by approaching those offering the amount and loan period you require.

Furthermore, you should consider whether you really need to get a secured loan.

For example, if your income is stable and credit status is good or fair, you might be eligible for an unsecured loan and so avoid needing to use your home or property as security.

Some people conclude that a secured loan is not the right choice for them and opt for a remortgage or equity release as a better deal.

Another way to speed up the secured loan process is to approach a reputable secured loan broker. They can help you transfer your loan request to multiple lenders in the market all at once, speeding up the process and your chance of getting approved.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

Identify what amount you can borrow and for what time

Calculating the loan amount you require and how long for will definitely make your secured loan application process faster.

Perhaps you want to borrow the highest amount possible, like £100,000. But can you afford it? When you calculate your income and costs, you might see that you can only afford to take a £20,000 loan.

Identifying how much you can borrow can help you narrow down your search and find the best loan for you.

In addition, it helps speed up things if you request a loan amount that is in line with the same value as your property or your earnings. Asking for a sum way over your affordability will force lenders to disapprove your application.

Gather all your documents

To be approved for a loan, you will be requested to supply some information, including proof of identity, income, employment and property details. So, having all these documents handy on your computer to send to your lender will help to speed up the process further.

Most of the information you require can be obtained from your employer, online banking portal, or mortgage provider and downloaded for free.

Have all documents about your property ready. If you want to buy a property with a loan, acquire all the possible information about it. You will need information such as the address, its estimated valuation, and how much equity you have in it.

Try to email your information

Most lenders will have you send your documents online. However, some lenders might ask you to sign and send them by post.

You can always ask your lender if you can send them online to help speed things up.

If your lender insists on using post, use first-class mail and post them early in the day so that they will arrive the next day instead of three days later.

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Apply at the right time

Do you want your secured loan to get approved and funded faster? Then you need to know that some times are better to apply than others.

Never try to apply for a loan on a Sunday, a public holiday or during breaks like Christmas. You will certainly not get a quick reply from the lender.

Other things to consider are current market conditions; times of the year when loan processes are slow because lenders are extra sensitive.

For example, a dip in the economy or annual budgets might make lenders extra cautious about lending. Similarly, if you apply during Christmas and summer holidays, fewer solicitors and surveyors are available to help you get your loan.

By following our useful tips and speedy-up loan tricks, you will be able to successfully get your secured loan within four weeks or less without a problem!

How long does a secured loan application take to complete?

Give Loanable a call today on 01925 988 055 and they will provide you with the best deals available to meet your circumstances and consider any credit history you may have. With their expert advice, they can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of Loanable’s secured loan experts by emailing hello@loanable.co.uk who can work with you to find the best deal for your needs and circumstances.

Storage boxes are piling up in the conservatory, two of your kids are sharing a room that seems to be getting smaller by the day, and every time you turn around, you’re bumping into someone, and that new sofa you’re dying to buy is just too big for the living room.

The kitchen is in need of a lot of TLC – what now?

Perhaps you’ve thought about moving to a “better” home, but how realistic would that be?

It could potentially add more stress to your current situation – after all, moving can be costly and trying to get all that furniture and the kids to a new location may seem daunting.

Loans for House Extensions

The next best (or possibly even the best) option is to carry out house extensions.

Running out of space can be a serious problem for Brits who already love their home.

You may not want to move house, but how do you continue to live in a space no longer catering to your comforts?

Moving to a bigger home may also prove expensive, especially when you consider the stamp duties, legal fees, and removal fees involved in the process.

Financing a house extension is a common need in the UK, mainly with homes being typically small all across the country.

This guide aims to advise you on house extension costs, how to fund the extension, and what planning permissions you might need.

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What Does a House Extension in the UK Typically Cost?

Before applying for finance for your house extension, you need to have a good idea of what the extension will cost you in the first place.

Of course, every house extension has a different price tag attached – after all; you might want extravagant changes that don’t come cheap.

Generally speaking, most house extensions in the UK range between £1,350 to £2,250 per square metre (excluding VAT), depending on the finishes and products you choose to use.

However, kitchens and bathrooms could add hefty costs to your overall extension, with kitchens often costing a further £10,000 and bathrooms around £5,000.

While home extensions are undoubtedly expensive, there are various suitable ways to fund such a project.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

How to Finance House Extensions

Financing for a home extension can be used for several purposes – once you have the finances, you can use it for whatever you want.

You can use such a loan to repair or renovate the roof, replace the central heating, create more living space, renovate the kitchen or bathroom, or carry out general repairs and maintenance to increase the property’s value before you choose to sell it.

There are several ways to finance a house extension, with secured loans being our top pick, followed by unsecured personal loans and remortgaging your current home loan.

Secured Loans

First on our list are secured loans, and they’re a top pick for many Brits looking to increase the size of their homes most conveniently and cost-effectively.

Secured loans are undoubtedly the easiest way to secure finance for your house extension. A secured loan is money that is borrowed while using an asset as collateral. It is the collateral that “secures” the loan.

Most people use their home as security because the lender can repossess and sell the property if you default on your loan repayments.

Secured loans are sometimes referred to as homeowner loans because they are secured against property.

One of the biggest perks of this loan is that you can borrow larger amounts of money, and the rates attached are usually reasonable.

Homeowner loans can be used to purchase anything from a vehicle to home alterations, and they’re typically over £20,000.

How much you can borrow, the repayment term and the interest you’re charged will all depend on your credit history, personal affordability, and the equity you have in your property.

Unsecured Personal Loans

You may find that an unsecured personal loan is a convenient option for financing home extensions. However, unsecured loans don’t require your home or other assets as collateral, and it must be noted that because of this, they are often trickier to get approval for.

To get approval for an unsecured personal loan, you will need to have a good credit rating, and you can expect the interest rate to be higher than if you opt for a secured loan.

The downside of unsecured personal loans is that the amount you can borrow may not be the amount you need. And if you choose to settle the loan early, there may be early payment penalty charges.

Remortgage Your Home

Remortgaging your home is a great way to borrow money against your house by moving your mortgage to a new lender.

Of course, this option comes with some risk as you will be borrowing money against your home, so you could lose your home if the added expenses become too much to afford.

You may also be subject to an early settlement penalty if you repay the mortgage early. There’s also the chance that you can save on your overall mortgage cost by switching to a new lender!

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Is Planning Permission Required for a Home Extension?

Home extensions in the UK are typically considered permitted development. This means that you won’t require planning permission.

There are, of course, exceptions to that rule, so it is highly recommended that you get in touch with the HomeOwners Alliance before getting started with your home extension.

How to Finance a House Extension Final Thoughts

When planning a home extension in the UK, take the overall cost into consideration. It may be best to get quotations on your required alterations before applying for a loan or remortgaging your home.

Once you know how much you need, you can shop around for the best finance deal. Keep in mind that loans come with financial responsibility – only apply for a loan or remortgage your home if you can comfortably afford the additional expense.

Give Mortgageable a call today at 03330 90 60 30 or contact us to speak to one of our friendly advisors.

Loans aren’t always needed for emergency situations.

Sometimes, they are required for the bigger things in life, such as setting up a new business venture, home improvements, weddings, or vacations.

Whatever the reason for the extra cash needed, unless you have a wealthy relative or win big on the lotto, the chances are you will probably need to consider taking a loan to cover these high costs.

The good news is, many top UK lenders offer secured and unsecured loans of up to £100,000, which you can choose to pay back over 1 to 30 years, depending on the lender.

However, you should ask yourself one primary question when considering a loan of this size, what is the cheapest way to borrow this amount of cash?

Most people think they need to own property or have no debt to apply for a loan, but this is not the case.

Whether you own your own home, are a tenant, have poor credit or excellent credit score, there are lenders who will be willing to offer you a loan.

However, owning property or valuables that can be used as collateral can improve your chances of securing a higher loan amount.

Another way to save when applying for a loan of this size is to use online loan calculators. Online applications don’t attract fees when applying, and your credit score will not be affected.

This makes searching for the most affordable loan much easier than ever before! In addition, online applications help you avoid time-consuming face-to-face appointments and travel time – saving you fuel and time spent away from work.

Once your online application is submitted, it is reviewed, and many lenders provide potential borrowers with a loan decision on the same day!

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Cheapest Way to Borrow £100k In The UK

Qualifications to Borrow

Qualifying criteria will vary depending on the lender, but general requirements include the following:

• Be over the age of 18.
• Be a UK resident.
• Have steady employment.
• Be able to show proof of regular income and ability to make repayments. (bank statements)
•  Own a good or fair credit score for unsecured loans.
• Own a vehicle or home for secured loans.

Loan Features To Consider And Reduce Costs

• Loan amount

Is the loan amount required, and can you afford to repay it?

• Repayment term

Does the lender offer flexible repayment terms? Look for a repayment term that suits your budget and offers a low-interest rate.

• Monthly repayments

Monthly repayments are an advantage for borrowers who get paid monthly. In addition, repayments can be set to a fixed amount allowing you to budget easily.

• Early repayment option

Check if your loan choice allows you to repay the loan earlier than agreed, as sometimes early repayments can attract fees.

• No upfront fees

Many loan options will waive upfront fees to attract borrowers.

• Bad credit

Many UK lenders will still accept you for a loan even if you have a less than perfect credit history.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

How To Find the Best Loans?

The first thing you need to do is compare the loans available to you on the market. Compare the below factors when applying for your loan:

• Interest rates.
• Loan term.
• Type of loan (secured/unsecured).
• Repayment examples.
• Loan duration.

Once you consider all the different options, you can decide which type of loan is best for your pocket.

Many loan applications can be made entirely online, so you don’t have to do any paperwork or make trips to and from the bank. And if your lender asks for details such as bank statements, you can send them to them via email.

How Can I Borrow £100K?

You can loan £100k with an unsecured loan if you have a strong credit score. In most cases, the funds will be paid to you.

However, if you have a bad or less than perfect credit score, you can use your home or property as collateral.

Remortgaging, homeowner loans or loan equity releases are other ways of raising the funds you require.

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What Types of Loans Are Available?

Loans fall into two primary categories, secured or unsecured.

Unsecured Loans

An unsecured loan does not require any collateral to support the loan. Instead, your eligibility for a loan is determined by evaluating factors such as your income, employment status and credit score.

As a result, unsecured loans work better for people with good credit scores. Examples of unsecured loans are personal loans, business loans and other short-term loans.

Secured loans

You will need to put a valuable asset such as a car or property as collateral for a secured loan. Secured loans are a good option for customers with poor credit or who need to consolidate debts.

However, if repayments are missed, you will risk losing possession or ownership of your property. Second mortgages, homeowner loans and logbook loans are all types of secured loans.

Equity release

Customers over 55 are eligible for equity release. Simply put, the borrower ‘sells’ a part of his home and, in return, gets a considerable amount of tax-free cash. The money can be used for everyday purposes.

Can I Borrow If I Have Bad Credit?

Many lenders are more than willing to give loans to people with bad credit.

All they need is to be sure that you can afford to pay monthly repayments. However, you may need to use your home, car or other valuable items as collateral to secure the loan.

How Can I Use The Loan?

Most loans of £100K do not have a restriction on their use. This is because lenders are not concerned with how you are using the funds but rather how you will be repaying the loan.

• To purchase a car or other vehicle
• To make home improvements
• To consolidate debts
• For emergencies
• For weddings costs
• For funeral costs
• To start a business
• To gift family or friends
• To pay tax bills

How Can I Borrow With Minimal Cost?

You can approach a loan broker who will help you compare loan rates and find the best deal for you, or you can use comparison websites to help decide which loan is cheaper.

Loans with cheap rates are readily available for you if you have a good or fair credit score. If you have a history of repaying credit on time, you can get rates from around 3% APR.

Secured loans also come with lower rates. Your income, credit status and other factors will be checked to determine the rate lenders will be willing to offer you.

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Cheapest Way to Borrow £100k In The UK: Things to Consider

When loaning £100,000, the following factors should be considered:

• Do you really need to borrow and why?
• Have you considered your other options besides taking a loan?
• Which is the right loan for you?
• Have you compared enough loan options?

Borrowing a large sum is a major decision. Take your time and ensure you are familiar with the terms of the agreement, the repayments and the consequences of not adhering to the loan agreement.

Give Loanable a call today on 01925 988 055 and they will provide you with the best deals available to meet your circumstances and consider any credit history you may have. With their expert advice, they can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of Loanable’s secured loan experts by emailing hello@loanable.co.uk who can work with you to find the best deal for your needs and circumstances.

If you are thinking about borrowing money, you have to face the decision of whether you are going to take a secured loan or an unsecured loan.

What’s the difference between them? The primary difference is that, unlike an unsecured loan, a secured loan is backed up by collateral, which is a valuable personal asset you own, such as a car or property.

With a secured loan, the lender has the power to take possession of the collateral if you don’t pay back the loan on time or fully as agreed.

The most common types of secured loans are car loans and mortgages.

On the other hand, an unsecured loan is not backed up by any collateral.

So even if you mess up paying the loan, the lender won’t be able to seize your property automatically. Some common unsecured loans are student loans, credit cards, and personal loans.

For larger amounts, secured loans are easier to get than unsecured loans. This is because secured loans are less risky for lenders, so getting approved increases.

Compared to unsecured loans, securing a loan with a valuable asset such as a car or house means lower risk for the lender.

As a result, lenders will be less likely to reject your loan on factors like credit scores when considering your application.

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How Does a Secured Loan Work?

A secured loan mandates borrowers to place collateral against the loan. Doing this gives borrowers the incentive to settle the loan on time.

After all, the possibility of losing your car, land, or house is a strong motivator to pay the loan and avoid the loss of valuable possessions.

When applying for a secured loan, your lender will ask what collateral you are willing to put up against the loan you need.

Then, if you struggle to repay the money, the lender can put a lien on the collateral. Placing a lien means that the lender can claim the borrower’s collateral as his possession.

The lender has the authority to keep the lien active until the money is repaid fully. The lien will be lifted once the loan is paid and the collateral ownership comes back to the borrower.

If the borrower defaults on the loan, the lender can access the loan collateral, sell it off, and cover any losses on loans.

This is why it’s so important for borrowers to consider what asset they’re using as secured loan collateral and be sure whether they are willing to risk it against a lien or loss if the secured loan falls into default.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

Types of Secured Loans

Mortgage Loans: A mortgage is one of the most common types of secured loans. It’s a loan to pay for a home. The borrower is required to put his house as collateral.

If the secured loan is not paid back, the borrower can lose the home. A mortgage loan involves a monthly payment of the principal and interest, taxes, and insurance.

Vehicle Loans: Loans for cars, boats, motorcycles, and aeroplanes are all secured loans, and the vehicles act as the collateral backing up the loan.

Like a mortgage loan, failing to pay the secured loan will end up in the vehicle being taken by the lender. Your monthly loan payments will consist of a monthly payment and interest rate, determined by various factors.

Secured Credit Cards: If you have no credit history, secured credit cards are an excellent way to accumulate and build up credit scores.

However, unlike mortgage loans or vehicle loans, a secured credit card will require you to deposit cash as collateral.

Which Assets Can be Used to Back Your Secured Loan?

Generally, you can use any asset allowed by the law as collateral to get a secured loan. However, most lenders look for liquid assets that can be easily sold for cash. The asset should also have a roughly equal value to the borrowed loan amount.

The following are common types of secured loan collateral:

• Real estate.
• Bank accounts, including savings accounts, checking accounts, and money market accounts.
• Vehicles such as cars, trucks, SUVs, motorcycles, boats, etc.
•  Stocks, mutual funds, or bond investments.
• Insurance policies.
• Precious metals.
• High-end collectables and other valuables.

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Pros and Cons of Secured Loans

Before deciding on a secured loan, you should weigh the value of obtaining one. Read on below to find the pros and cons of secured loans.

Pros of Secured Loans 

• Excellent credit score not needed: Even if you have a poor credit score, a secured personal loan allows you to borrow that cash and brighten your future. There are always lenders who are ready to offer bad credit loans.
• Increased approval chances: You have more chance to get a secured loan than an unsecured loan- even with poor credit history. Since your loan is secured against your valuable property, the lender faces less risk and is more willing to give you the loan. If you don’t repay the loan, they can take that asset to recover the owed money.
• Lower interest rates: Secured loans come with lower interest rates. Since your asset is used as a backup, it reduces the overall cost of borrowing.
• Higher loan amounts: You can borrow larger amounts than unsecured ones in secured loans because lenders view secured loans as less risky.
• Opportunity to build credit score: Each time you pay on time, you build up a good credit record.
• Longer repayment time: Secured loans allow you to repay the loan over a longer period of time, making them more affordable each month.

Cons of Secured Loans 

• You might lose your collateral: You put up an asset in exchange for a loan in a secured loan. If you can’t repay your loan as agreed, you will lose your asset.
• Your credit history might be damaged: Failure to make payments in time will result in a poor credit score.
• Spreading payments means more interest: In a secured loan, you can spread your payments over a more extended period, which means paying more interest overall.

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Is It Easier to Get a Secured Loan? Last Word

A secured loan is easier to get than an unsecured one because it is backed up by collateral, posing less risk for the lenders and making them more willing to loan them money.

Still, acquiring a secured loan is a decision that requires serious planning and preparation.

The best approach is to realise the risks, find the right lender, and have a backup plan in case of inability to repay the secured loan.

Your secured loan experience will be rewarding if you tackle these fundamental points: getting the cash you need while keeping your valuable assets in your possession.

Give Mortgageable a call today at 03330 90 60 30 or contact us to speak to one of our friendly advisors.

When choosing between a secured loan or remortgaging, your financial situation will determine which is best for you.

Since both secured loans and remortgages are secured against your property, there is a risk of repossession in both types of loans if you struggle with payments.

So, whether you get a secured loan or remortgage, you first need to be sure that you can afford it – that’s the first step.

The second step is understanding your needs so that you can select a finance package best suited to them.

Secured loans vs remortgaging

In the case of remortgaging, the basic idea is that you are replacing an existing mortgage with a new one.

You can choose to remain with your present mortgage provider or switch to a different one.

Why would homeowners want to do this? It may be for the following reasons:

• Their initial mortgage offer has been terminated.
• They found a better deal with more competitive rates and flexible terms.
• They need more funds against their property (perhaps for debt consolidation or home improvements).

On the other hand, when you get a secured loan, you borrow extra money and do not replace your mortgage. People take secured loans for the following reasons:

• Consolidating debts.
• Home improvements.

Compared to mortgages, secured loans are riskier (from the lender’s view), so they also come with higher interest rates.

However, remortgaging might cost you more interest in the long run since repayments are sometimes spread over a longer time. This means that remortgaging might be a longer and more costly way to pay off your loan.

The loan is secured against your property in both cases, so you could risk repossessing your home if you don’t maintain your repayments.

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When are secured loans better than remortgaging?

A secured loan can be better than remortgaging in the following cases:

1. When you are struggling to show proof of your income. Maybe you have recently gone self-employed and cannot obtain a mortgage because those lenders require proof of income. In this case, a secured loan may be easier to find.
2.  When you want the money fast. Generally, waiting time from application to cash in hand is much quicker in a secured loan than in a mortgage.
3. When you have a bad credit score that mortgage lenders don’t like. With secured lending, lenders allow a much broader range of credit scores. However, some lenders focus on bad credit loans.

When are secured loans cheaper than remortgaging?

If you want to make a well-informed decision, it’s essential to calculate the costs attached to the different types of loans. For example, a secured loan can be less costly than remortgaging in some cases.

For instance, an early repayment fee could be payable if you remortgage before your current agreement terminates. Your mortgage lender will be able to let you know how much they would charge if you choose to remortgage early.

Confirm that this fee won’t surmount the money you can save by changing to a lower interest rate. You’re better off waiting for your agreement to terminate before you remortgage if it will cost you more.

It might be hard to remortgage if your credit score has dropped since you took out your mortgage.

Furthermore, you might face higher interest rates. The most competitive rates are reserved for those with the best credit scores, and lenders could be more hesitant to lend to bad credit.

As a result, it will be easier to find a secured loan than a mortgage if you have poor credit. Also, you would only pay a higher rate of interest on the extra money you borrow, not the entire mortgage.

So, the terms of your current mortgage would stay the same, and you simply pay the secured loan on top.

Keep in mind that you might be paying more interest in the long run by remortgaging since payments are spread over a longer period.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

Will a secured loan affect remortgaging?

If you have a secured loan, you can still remortgage. But your eligibility for a remortgage depends on your financial situation and the lender’s standards. So they will first analyse your condition to be sure that you can make the repayments in time.

You can choose to remortgage for a larger sum to completely pay off the secured loan. Alternatively, you can switch to a new mortgage and keep making monthly payments to your mortgage separately.

If you currently have a mortgage and seek to take out a secured loan, you can choose from a few options.

You can apply for a further advance from your present mortgage lender if you hold sufficient equity in your home. However, your monthly payments will be raised to account for this loan.

Second charge loans are secured loans held separately from your mortgage. You will make two sets of monthly payments secured against your home.

For example, your mortgage is cleared first if you sell your home, and your secured loan is cleared second.

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How much can I borrow?

The amount you can borrow depends on several factors, including:

1. Your situation.
2. The lender’s criteria.
3. The value of your property.
4. How much equity you have (equity is the sum you have left after deducting your outstanding mortgage from the value of your house).

You can expect to go through affordability checks. Lenders perform these because they want assurance that you can afford the repayments, even if situations change and interest rates increase or if your income decreases.

Secured loans commonly start at £10,000. However, you can borrow more with a secured loan than a personal loan because the lenders have the security of your property as collateral.

As a result, they can take over your property and sell it off to reclaim funds if you default on the loan.

Mortgage lenders can offer roughly four times your annual earnings.

However, keep in mind that you don’t have to accept the offered amount. Instead, determine whether you can afford to repay the loan and don’t get yourself in a financial dilemma.

Things to consider before taking out a secured loan

• Determine how much you need to loan and for how long.
• Find out how much you can afford to pay monthly for the entire term of the deal.
•  Compare different loans to find the best deal, including fees, interest, and charges.
• If you are loaning to consolidate debts, estimate whether it will cost you more by spreading the payments.
• See if you can improve your credit score and get your application accepted at the best rate.
• Don’t create many applications at once, which will give the impression that you are struggling financially and risk not being accepted.
• Use an eligibility checker to determine the likelihood of getting accepted before applying.

Things to consider before remortgaging

• Determine how much you need to loan and for how long.
• Find out how much you can afford to pay monthly for the entire term of the deal.
• Weigh the cost of remortgaging against your current mortgage or a secured loan, including interest and early repayment charges.
• If you are loaning to consolidate debts, estimate whether it will cost you more by spreading the payments.
• See if you can improve your credit score and get your application accepted at the best rate.
• Refrain from applying for credit in the months leading up to your remortgage application. It will give the impression that you are struggling financially and risk not being accepted.
• Use an eligibility checker to determine the likelihood of getting accepted before applying.
• Study comparison, or you might also want to speak to a financial advisor who can understand your case and find you the best deal.

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Should you get a secured loan or remortgage?

Give Loanable a call today on 01925 988 055 and they will provide you with the best deals available to meet your circumstances and consider any credit history you may have. With their expert advice, they can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of Loanable’s secured loan experts by emailing hello@loanable.co.uk who can work with you to find the best deal for your needs and circumstances.

If you’re grappling with substantial debt, an Individual Voluntary Agreement (IVA) might be the lifeline you need.

This legally binding arrangement forms a structured pact between you and your creditors, designed to clear all or a portion of your debts within a specific timeframe.

Committing to an IVA is a serious decision that comes with stipulations aimed at ensuring your financial recovery.

These conditions include adhering to a manageable monthly repayment plan and refraining from incurring additional debts.

It’s crucial to fully understand and comply with these terms to successfully navigate your path out of debt.

Navigating the complexities of securing a loan while under an IVA can be challenging, but not impossible.

Let’s delve into the details of how you can approach this responsibly and make informed decisions about your financial future.

Can I Take Out Loans During An IVA?

While your IVS is ongoing, you can’t borrow more than £500 without permission from your insolvency practitioner (IP), who sets up and manages the IVA.

The restriction includes both formal and informal loans.

You must contact your IP if you need a loan greater than £500 when faced with a sudden expense or emergency.

They’ll need you to explain why you need the loan and discuss your options with them. If your IP feels that the loan is warranted, they’ll permit you.

The restriction ensures you don’t get into further debt and keeps your IVA running smoothly.

You’ll be going against the IVA terms if you take out a loan larger than £500 without the permission of your IP.

You risk termination of your IVA if you do, and you can face legal action against you.

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Will The IVA Affect My Credit Rating?

Details of your IVA will remain in your credit file for six years from the date the IVA starts, and this will negatively impact your credit rating.

Even with permission from your IP, you’ll find it difficult to access credit in the short term.

Details of IVAs remain in a public register called the Individual Insolvency Register for the length of the IVA. Anyone can check this register, including lenders, when you make a loan application.

It may be hard finding a lender willing to lend to you, since having an IVA means you’re already struggling with debts.

Even if you do, they’ll likely charge high-interest rates and include some string terms.

Traditional and high street lenders like banks will likely reject your application automatically once you fail their credit check.

You’ll have better chances with specialised lenders who provide loans to borrowers with bad credit, and you can only access them through lending brokers and advisers with a whole of market access.

Related quick help guides: 

• Secured loans brokers.
• Secured loans for pensioners.
• Secured loans for self employed.
• Interest only secured loans.
• Can I get a secured loan on a buy to let property? 
• Secured business loans.

IVA Early Settlement Loan

There are occasions where you may be able to settle your IVA early with a full and final settlement and free yourself from its constraints.

Usually, after three years of the IVA, you can get a loan to pay your IVA off early. It releases you from the IVA and helps build up your credit score.

You’ll need to offer your creditors one lump sum and ask them to agree that no further monthly payments will be required from you once you pay.

Although your IVA will be considered complete, keep in mind that:

• The IVA will remain in your credit file for six years from the start of the IVA.
• You may still find it difficult to access loans and credit options straight away.
• You’ll have to repay the loan you take out to settle the IVA early.

You’ll need to inform your IP that you wish to settle your loan early and discuss it with them.

If your IP feels the offer is reasonable and likely to be accepted by your creditors, they’ll arrange a variation meeting.

It’s usually proposed when changes need to be made to the original terms of the arrangement.

You must be clear and transparent in your proposal about where the money is coming from to assure them it’s from a legitimate source and not included in your IVA like your inheritance.

Similar to the original IVA proposal, 75% of your creditors by value must agree to your lump-sum offer for it to go ahead.

Various lenders offer IVA early settlement loans, and you can contact them once you have permission from your IP and creditors.

You’ll find that they have criteria you must fulfil to be eligible, like the amount of time the IVA has been active, any current arrears or the number of missed IVA payments.

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How Much Would I Need To Settle My IVA Early?

The amount needed to settle the IVA arrangement will be different for each individual because no two IVAs are the same. The amount can depend entirely on how much is left on the arrangement, and it may be up to your creditors.

It’s wise to aim for offers as close to the amount you owe as possible.

It’s up to your creditors whether they accept your offer, and you must ensure the early settlement does not disadvantage them.

If creditors reject your early settlement offer, you’ll simply continue making IVA payments as originally agreed.

Other Funds That Can Settle Your IVA Early

Money gifted by a friend or family member can also settle the IVA early. A lump sum provided by a third party to settle the IVA early is usually accepted.

You’ll need to discuss it with your IP and provide some information about them before they approach your creditors, and this can include their ID, consent and proof of funds.

Note that windfalls received during your IVA are normally paid into the arrangement in full.

Such injection of extra funds doesn’t automatically reduce your IVA length, and you’ll continue making monthly payments.

However, depending on the amount you can pay as a lump sum, the length of your IVA can reduce, especially if you’re able to pay your creditors back in full plus the IP fees.

A variation meeting isn’t necessary for such scenarios, and you can simply complete your IVA.

Can I Borrow From Friends And Family During My IVA?

The same rules apply for informal loans, and you’ll be restricted from borrowing above £500 during your IVA, even if it’s from friends and family. If you can’t make do without a loan, then you can talk to your IP for permission and guidance.

Borrowing from family and friends is usually discouraged during the IVA because it can easily impede the progress of your IVA.

You’ll likely show preferential treatment towards them and pay them back first, which can upset the other creditors and cause your IVA to fail.

Securing A Loan As A Homeowner During Your IVA

As a homeowner with equity in your property, you may be required to remortgage in the final year of the IVA. Your home’s value is usually taken into account as part of your IVA, and in the final year, you must get a valuation to determine how much equity is in it.

If the valuation shows more than £5000 equity in the property, you’ll be required to remortgage to raise a lump sum that goes into the IVA. However, you’ll not be required to sell your home.

The IVA places a limit on the amount you’re expected to raise by remortgaging based on the value of your home and the amount of mortgage you already have.

If the new mortgage would extend beyond the existing mortgage or your state retirement age, then you’re not expected to remortgage.

You’ll simply continue making the usually monthly IVA payments for the remaining twelve months if you can’t remortgage.

Secured Loan With IVA Final Thoughts

Getting a loan with an IVA can be challenging and even impossible at times. It’s only advisable when there’s no other choice, and you simply need to contact your IP for advice and permission for loans above £500.

Give Mortgageable a call today at 03330 90 60 30 or contact us to speak to one of our friendly advisors.