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Secured personal loans

Secured loans use property as collateral against your loan, often at a lower interest rate than unsecured loans.

With a secured loan, you may be able to borrow a larger sum of money with a longer repayment period than other types of loans by securing the loan against an asset such as your house or another property you may own.
  • Rates for secured loans are usually cheaper than unsecured or personal loans

  • People who don’t have a good credit history, but have value in their home, may apply for a secured loan

  • Secured loans can be used to raise money for most purposes, including home improvements, debt consolidation or business needs

  • Making regular repayments on time could improve your credit score

  • The loan is secured against your home or another asset

  • Defaulting on repayments could put your home or assets at risk

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What is a secured loan?

A secured loan is guaranteed by a specific asset that you own, such as your home or another property you may own. Whatever the asset, taking out a secured loan usually means you can borrow more money than you would otherwise have been able to. This is because potential lenders may see you as a more reliable borrower with less risk attached.

Is it right for me?

Every type of loan has its benefits and drawbacks to be aware of. When you receive a secured loan offer from a lender, you should be confident that you can afford to make repayments as scheduled or risk losing your assets, including your home.

Benefits of choosing secured borrowing

With a secured loan, you’ll often find that repayment periods are longer, interest rates are lower and credit amounts are higher. This is because the lender has a substantial asset to secure the loan against, reducing the risk they face in the case of missed repayments. A secured loan will also allow you to keep your existing low rate mortgage product, which may attract early repayment charges it you settle it too early.

Risks of getting a secured loan

If a borrower regularly struggles to make repayments or can’t repay the loan, the assets they secure the loan against may be used to cover the outstanding debt by lenders.

In addition, borrowing a larger amount over a longer period could mean you pay more interest in the long run. It’s important to consider what you can afford before you apply.

Difference between secured and unsecured loan

These are two quite different ways to access the cash the borrower needs. Only those who own their own home or other asset can access secured loans. Borrowers in this position can typically access better rates and potentially borrow larger amounts.

Unsecured loans are more easily accessed by customers with a strong credit rating. Lenders see these borrowers as lower risk, so don’t need to offer the security of an asset to support their loan application.

Find out more about the differences between secured and unsecured loans.

Secured loans vs remortgage or equity release

Customers who own their home may consider a remortgage or equity release as a way of raising money. This would involve paying off your existing mortgage, which may result in a lower interest rate if you are not in a fixed rate period and on the mortgage lender’s standard variable rate (SVR). However, if you are still on a fixed low rate product, you may face an early repayment penalty.

Your existing mortgage lender may refuse additional borrowing, especially if your circumstances have changed since taking out your original mortgage. Also, if you want the money quickly and do not have time to instruct the solicitors required for a remortgage, then a secured loan may be a preferable option. It is important to always take advice from a reputable mortgage or loan broker to help you decide which is the best option for you.

Things to consider before you apply for a secured loan

Before you apply for a secured loan, there are some things you’ll need to think about to give your application the best chance of being approved by a lender.

Regular income and outgoings

A lender will need to know whether you can afford the monthly repayments on a loan secured by property. They’ll ask about your income, expenses and debts.

Your collateral/assets

The more equity you hold in your home or other asset, the less risk lenders will face. This could mean lower rates on your repayments.

Your credit history

You don’t need a spotless credit report to get a good rate, but lenders will usually want to see your borrowing history and any CCJs.

The purpose of your loan

Make sure you give a clear reason for your loan application. Some lenders may have a defined list of acceptable or unacceptable purposes.

Secured loan eligibility

Lenders take several factors into account when deciding if you’re a good fit for a loan product, including:

Take a look at our article on loan eligibility for further advice on whether you can apply for a personal secured loan.

Does credit score matter for a secured loan?

Credit history isn’t everything, but it is important. With loans secured on property, your credit score isn’t the only factor considered. Keep in mind that a better credit score might mean a lower interest rate.

Representative example

SECURED LOANS - Rates start at 3.37% variable. We also have a range of plans with rates up to 65.2%, giving us the flexibility to help you find a loan that suits your needs.

Representative example: if you borrow £10,000 over 10 years at an Annual Interest Rate of 5.14% (variable), you would make 120 payments of £122.71 per month.

The total amount repayable will be £14,725.20. This includes a lender fee of £495 and a broker fee of £1,000, both of which have been added to the loan. The overall cost for comparison is 8.6% APRC representative.

The maximum APR is 65.2%.

What do I need to apply for secured finance?

Once you’ve begun your application online, we’ll be in touch by phone to go over a few details. We’ll ask for further information, including:

We’ll probably also discuss what you plan to use the loan for. Most importantly, we’ll need to gather some information about your home. You would only qualify for a secured loan if you’re a homeowner.

In order to help our call with you moves as quickly as possible, it would help to have some details of your current financial situation to hand. Recent bank statements, payslips and a mortgage statement would all be useful in case anything comes up that we’d like to know about you.

Frequently asked questions about secured loans

Loans secured against property

Can I pay off a loan early?

You can pay off the outstanding balance on a loan at any time. However, many lenders will charge an Early Repayment Fee. Depending on the size of the loan, this might make early repayment a less desirable outcome, so make sure you can afford the repayments from the outset.

Can I take a break from paying back my secured loan?

Some lenders may offer you the chance to take a ‘payment holiday’ on your loan. However, you should make sure this won’t change your financial situation before agreeing to their terms. Payment holidays might show up on your credit report, so it’s important to discuss it first.

Loans from Norton Finance

Norton Finance can find a loan that corresponds to your personal financial situation and your individual needs. And, because Norton is a broker rather than a building society or bank, we can scour the full market for exactly that.

With access to around 600 products, we can find something that suits your needs. The flexibility of the loan products we find will let you borrow from £3,000 to £500,000, over almost any period between 1 and 30 years.

We’ll make an "in principle" decision on your application within 24 hours of receiving it and can make a direct payment in around 14 days.

Loan details

With access to around 600 products from our panel of lenders, we offer flexibility and a straightforward loan process. There’s plenty of variety around maximum loan amounts and repayment terms, giving you control of your financial future.

What can I use a secured loan for?

You can use personal secured loans for any purpose, but your lender might want to know what your intentions are. People tend to apply with a specific, large project in mind, such as:

Home

Home improvement

Borrow to raise the funds for the materials you need to redecorate, or build an extension.
Heart

Wedding

Keep plans for your big day on track with a secured loan.
Car

New car

If your set of wheels has seen better days, think about applying for a new car loan.
Money

Debt consolidation

Improve your monthly situation by borrowing to settle your other loans and repay at one single rate.

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