What Are Secured Loans?

A secured homeowner loan is a type of borrowing that allows you to use your owned property as collateral.

Here’s how it works:

Collateral: You use your home (whether you own it outright or have a mortgage) to secure the loan. If you have a mortgage, be that in the UK, most lenders will ask for written permission from your mortgage company before lending you any money.

Lower interest rates: Because your property acts as security, lenders could offer lower interest rates compared to unsecured loans.

Higher loan values: Secured homeowner loans could allow you to borrow larger amounts, making them ideal for significant expenses.

How do secured homeowner loans work?

How much can you borrow? The loan amount offered will be based on a percentage of your property’s value.

Exactly how much you can borrow is decided based on a combination of things, such as the value of your property, and the equity you have in your property, as well as your regular income and expenditure, your credit score and the lenders individual criteria.

How much equity do you have in your property? If you’re not sure how much equity you have in your property, you can work it out by finding out the current value of your home (this can be done online or through an estate agent). You then subtract the current amount owed on your mortgage, which you can get from your mortgage lender, plus any other debts you may have secured against your home. The difference is your equity.

Example:

Your home is worth £250,000, your mortgage balance is currently £195,000. You have no other debt secured against your property.

250,000 – 195,000 = 55,000, so your equity would be £55,000

This doesn’t mean a loan provider will offer you that amount. They will also look at how much you can afford to pay each month, your credit score and a number of other factors which can differ by lender.

Monthly repayments: You’ll make regular monthly payments over an agreed timeframe.

Risk and responsibility: While secured loans could offer favourable terms, remember that your home is at risk. If you can’t repay, the lender could repossess your property.

Benefits of choosing a secured homeowner loan:

Lower interest rates: A secured loan could offer lower interest rates.

Higher loan amounts: You could borrow more than with unsecured loans— this may be ideal for major home renovations or larger expenses.

Considerations:

Affordability: Ensure you can comfortably manage the repayments.

Risk: Understand the commitment—your home is the collateral.

• If choosing a secured loan, your home is at risk, think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
• Secured loans attract a broker fee and a lender fee upon completion, which may be added to the amount borrowed. The credit broker will provide full details.

Who are secured homeowner loans suitable for?

Secured loans are ideal for:

Homeowners: Whether you fully own your home or have a mortgage, depending on your mortgage status and if you are up to date with your mortgage repayments.

Larger sums: When you need to borrow more than an unsecured personal loan can offer.

Long-term financing: To spread out costs over an extended period.

Remember:

Equity matters: Lenders may want to see that you’ve built up equity in your home.

Affordability: Be confident you can manage the monthly repayments.

Conclusion:

A secured homeowner loan provides access to finance, often with favourable terms, but it’s essential to weigh up the risks. Consider your financial situation carefully before securing a loan against your home.

If choosing a secured loan, your home is at risk, think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. 

Secured loans will attract a broker fee and a lender fee upon completion of the loan and these may be added to the amount borrowed. Full details will be provided by the credit broker.

Find out more about secured loans here and check your eligibility without harming your credit score.

Credit is subject to status. You must be a UK resident aged 18 and over. Regular income provable. Minimum loan term is 12 months. If you are a homeowner, V12 Personal Finance, which is a trading name of V12 Retail Finance Limited, may provide you with details of loans secured against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The % APR rate you will be offered is dependent on your personal circumstances. If consolidating existing borrowing, you may extend the term and increase the total amount you repay. Secured Loans will attract a broker fee and a lender fee upon completion of the loan and these may be added to the amount borrowed. Full details will be provided by the credit broker.

V12 Personal Finance is a trading name of V12 Retail Finance Limited. V12 Retail Finance Limited is a credit broker and not a lender. V12 Personal Finance introduces to one or more lenders or credit brokers, for which we will receive a fee or commission payment for each successful paid out loan. The amount of the fee or commission payment will vary depending on the product chosen and the amount of credit taken out.