Secured Loans FAQs

If you are a UK resident and you are a homeowner or mortgage holder with enough equity in your property to serve as security against the loan then the answer is yes!

The primary difference between a secured loan and an unsecured loan is that you do not need to provide security to take out an unsecured loan, it is normally solely based on your credit history and affordability. Nevertheless, you could still find yourself in a position where you have to sell your assets, in order to clear your unsecured debts. In addition, unsecured loans are usually available for significantly smaller sums of money than secured loans. As a rule of thumb, secured loans also have more competitive rates of interest, as the assets used to secure the loan represent an ‘insurance policy’ for the lender. In the event that a secured loan is not repaid as agreed, the lender is legally entitled to take ownership of the assets/property used to secure the loan.

Secured loans shouldn’t be taken out for the purpose of credit repair, however, if you do have a secured loan and you are keeping up with your monthly payments it can help your score improve. Keep in mind your credit file is based on your finances as a whole which means all of your credit commitments should be paid on time for your credit file to improve.

Yes, secured loans can be consolidated, usually they are repaid as part of a full re-mortgage.

You are able to take out one secured loan per property. It is subject to affordability and lender criteria at the time of the application.

Unfortunately, if there is no equity or not enough equity in the property a secured loan will not be possible.

If you miss any payments on a secured loan it will be registered on your credit file. It is classed as a mortgage missed payment which can impact future mortgage applications. If you continuously miss payments, your property will be at risk of repossession. If you are unable to keep up with your payments for any reason, we would strongly recommend you speak directly with the lender to see how they can support you.

You can pay off your secured loan, however there may be early repayment charges, so it is best to check this before paying. Some lenders may have a redemption fee too. If you want to make smaller lump sums then it is worth checking whether overpayments are allowed as most lenders allow 10% overpayments per year without any early repayment charges.

There is no difference between these two options. It is a loan which is secured as a second charge on a property.

This is the percentage of the property value that is financed by a loan. It is calculated by dividing the finance amount outstanding, by the property value and then multiplying by 100. For example, a property valued at £300,000 with a mortgage outstanding of £100,000 is currently at 33% loan to value (£100,000 divided by £300,000 x 100).

This is the interest rate the lender sets which is usually tied to the bank of England base rate or LIBOR rate. This interest rate can change overtime meaning your monthly payments are not guaranteed to be a certain amount every month.

We are able to obtain a decision in principle on the same day requested or the next working day. This is still subject to full underwriting checks and a valuation. The offer can take 1 to 2 weeks depending on valuation and underwriting timescales.

The process of a secured loan application is very similar to a mortgage. On average it takes 6 to 8 weeks to complete.

We can only help where we are securing against a property. The property can either be your main residence, or a buy to let investment property.

For a clearer indication of what to expect if you decide to go ahead, use our online secured business loan calculator. Simply enter the amount you would like to borrow, the approximate APR and the length of the repayment period to find out the total borrowing costs.

Alternatively, contact a member of the team at UK Property Finance anytime for an obligation-free consultation.