Your home
The security has to be worth more than the amount you’re borrowing, so a more valuable home may mean you can borrow more money
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Secured Loans
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What is a secured loan?
Secured loans – also known as homeowner loans or security loans are a type of loan that uses a valuable asset, usually your property as collateral. This extra security means there’s less risk for the lender so you may be able to secure bigger loans and lower interest rates.
However, they're also higher risk: if you can’t make up your repayments, they can always take possession of your property.
But with so many providers out there, it can be tricky to know where to turn to find the right deal for you.
That’s where we can help. With our chosen partner Fluent, we search the market for deals tailored to your needs and financial situation, and we’ll also show you your chances of being approved for each one to help you avoid any nasty surprises further down the line.
Is a secured loan right for me?
Whether a secured loan is the right choice for you will depend on your financial situation. You should think carefully before getting a secured loan, since you risk losing your home if you can’t make your repayments. But there are good reasons to consider a secured loan too:
Low credit requirement
Secured loans give lenders extra confidence, so it’s possible to get a loan even without a good credit score
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Larger amounts
If you need a lot of money – for a home renovation, for instance – secured loans will often let you borrow more
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More affordable
Secured loans tend to offer lower interest rates – so if you’re confident you can pay back what you owe, they could save you money
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More time to pay back
Or you could opt to pay your loan back over a much longer period. You’ll pay more interest, but your monthly repayments will be lower
How much can I borrow with a secured loan?
Putting up your home as collateral means you can borrow much more than you would normally be able to. With an unsecured personal loan you can usually borrow up to around £15,000. The precise amount you’ll be able to borrow will depend on a few different factors:
Your equity
Lenders base their decision on the portion of your home that you own outright – so you can borrow more if you have a smaller mortgage
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Your financial history
If you’ve previously defaulted on a loan, you might not be able to borrow as much if it means you represent a higher lending risk to providers
What’s the difference between a secured and an unsecured loan?
Both secured and unsecured loans offer you a lump sum of money, and then give you a set amount of time to pay it back. But aside from that, they work very differently. Here are some of the important differences:
Secured loans
- Tied to collateral
Your loan is tied to your property, so it could be repossessed if you don’t keep up with repayments
- Broader borrowing options
With a secured loan, you could borrow larger sums of money and pay it back over up to 25 years
- Easier to get
Secured loans pose a lower risk to lenders, so you can get a loan with a lower credit rating
- Tied to collateral
Unsecured loans
- No collateral
If you default, it might be tricky to get credit in the future – but you won’t lose your home as the loan is not secured on your property
- More variable terms
It’s rare to get unsecured loans over £25,000 or longer than 7 years – and the interest rate you’re offered will vary more widely depending on your credit rating
- Stricter requirements
Lenders will look at your credit score, not your property – so it could be harder to get a loan if you’ve had debt problems in the past
Can I get a secured loan with bad credit?
If you’ve struggled with bad credit in the past and your credit score isn’t as high as it could be, it can still be possible to get a secured loan. This is because a secured loan is tied to your property, so creditors are less worried about losing their money if you default.
Taking out a secured loan and making all your repayments could even improve your credit score, making it easier to get credit in the future. But you should keep the risks in mind: if you hit financial difficulties and you can’t pay back what you’ve borrowed, it’s possible you’ll lose your home. Always think carefully about your options before you take out a loan and remember that your circumstances might change in the future.
If you’re looking to improve your credit score, a credit-builder credit card could be a good to start.
What do I need for a secured loan?
When applying for a homeowner loan you’ll need to have the following information to hand:
Confirmation that you’re a homeowner
Proof of address and address history of the last three years
Proof of income (like a payslip or bank statement)
Information on your incomings and outgoings
How to apply for a secured loan with MoneySuperMarket
See personalised deals and find the right homeowner loan for you
Tell us about yourself
We’ll need to know a bit about you. Register yourself as a homeowner to see secured loans in the results
We’ll browse the market
We’ll show you loans you’re eligible for – if you choose a secured loan you’ll need to register your interest with our partner Fluid
Discuss your options
Fluid will contact you to discuss your secured loan options. Once you’ve decided on a loan you can make your full application
Are secured loans easier to get?
What credit score is needed for a secured loan?
How do you get a secured loan?
Do secured loans help your credit score?
Can I pay off a secured loan early?
Is it better to get a secured or unsecured loan?
Can I get a secured loan against my car?
Can I get a secured loan against my pension?
Secured loans can be easier for people with lower credit scores to get. Certain loan providers will be more inclined to lend money to someone with bad credit if they’re putting up a security.
That depends on the provider, but while lenders might be prepared to offer secured loans to a wider range of customers, it is definitely possible to have a credit score that’s so low you won’t be considered for this kind of loan. If you’re at that stage, you should seriously reconsider borrowing any more money.
You get a secured loan in the same way as other loans: by making an application to a loan provider. This will require you to provide some details about yourself and your finances. If you’re approved, you should receive the money in a few days
If you take out a secured loan and manage to meet all of your monthly repayments in full and on time, you might see your credit score improve over the course of several months.
A secured loan isn’t necessarily the best way to improve your credit score however. Consider a credit-builder credit card if that’s your goal.
You may be able to pay off a secured loan early, but this will depend on your loan provider. Some lenders may charge an early repayment fee.
An unsecured loan is certainly a less risky proposition than a secured loan as there’s no collateral on a standard personal loan. However, if you need a substantial sum of money and you’re certain you will be able to make your repayments, a secured loan might be more suitable.
Of course, you should consider the APR you are offered by your lenders as well: a secured loan with a lower APR might be a better bet than an unsecured loan with a high APR.
It might be possible to get a secured loan against the value of your vehicle with some providers – but currently, MoneySuperMarket only compares secured loans for homeowners. This means your collateral has to be a house or a flat.
There are plenty of providers that will allow you to borrow money against your pension fund – this is known as a pension loan. At the moment, MoneySuperMarket doesn’t compare pension loans, but you can find out more about your options by talking to a financial advisor.
Guide to getting a loan with bad credit
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Unsecured vs secured loans
It's important to know the difference between secured and unsecured loans before making any application
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