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What is a secured loan?

A secured loan, also known as a homeowner loan or a second-charge mortgage, is a loan that’s secured against an asset you own, such as your house. This is what’s known as collateral and means your house will be used as security, allowing you to borrow from your chosen lender. If you’re unable to keep up with the loan repayments, your asset may be taken away so that the lender can get the money they lent you back.

Secured loans provide a lower risk to the lender because you are using your asset as collateral. With that comes the potential to also receive lower interest rates than an unsecured loan.

What's the difference between a secured loan and an unsecured loan?

Secured loans

  • Risk of losing your home, or other collateral, tied to the loan. Just remember you may lose your home if you fail to keep up with repayments, as well as affecting your credit score and you access to lending in the future.
  • A larger sum of money could be available to you by opting for a secured loan rather than a regular loan.
  • Better interest rates are generally attached to secured loans.
  • Missed repayments could have a negative impact on your credit score.

Unsecured loans

  • No collateral or assets needed to get one. However, missed payments may lead to a mark on your credit report and a hit to your credit score.
  • Missed repayments may have a negative impact on your credit score and affect your credit profile.

What to consider before applying for a secured loan

How much can you afford to borrow?

It’s important to take a good look at your current financial situation. Weigh up what amount you are hoping to borrow as well as how much you can realistically afford to pay back. Secured loans normally allow you to borrow more. But that means you’ll probably be paying back more interest, so it’s worth bearing that in mind. Our loan calculator can help you work out an estimate of what you can afford.

Work out how much your asset is worth

If you’ve decided to use your house as collateral, it could really help to find out your asset’s value before applying for a loan. Having an idea of how much your asset is worth will give you an idea of what to expect when the lender arranges an independent asset review after you’ve applied for a secured loan.

Weigh up the potential consequences

If you default on your secured loan, you could lose your home if you used it as collateral. Make sure you’ve worked out if you’re able to make the monthly repayments on your loan before applying.

Loan fees

You might be expected to pay fees with your loan, including broker fees and arrangement fees. And, if you decide to pay your loan off early, you may have to pay early payment fees too. Finally, don't forget to take into account your APR as this will affect how much your monthly repayments are. Our guide on how to understand APR may help.

Your credit score

The interest rate and terms offered on your loan will depend heavily on your credit score and credit history. Generally, the higher your credit score, the better the deal you might get. It’s worth looking at ways to boost your score as much as possible.

Your future financial situation

Be sure to think of how your finances may change in the future and if this could affect your repayments. Any major future expenses, such as starting a family, should be taken into account when working out if you can afford the loan repayments.

Comparing loans with and Monevo

We’ve partnered with loans experts, Monevo, to offer great deals on unsecured and secured loans. With Monevo you’ll get:

  • A free, no-obligation-to-apply service
  • Eligibility checks, which will have no effect on your credit score

If you’re looking to apply for a secured loan, be sure to think carefully before securing debts against your home. If you’re unable to keep up with the repayments on a mortgage or any other debts secured against your home, it may be repossessed.

If you’re looking to consolidate any existing borrowing, be aware that you might be extending the terms of that debt and increasing the overall amount you repay.

Need more help?

What are the risks of a secured loan?

If you miss your monthly repayments, you could be at risk of losing your home or what you’ve used as collateral. Make sure you understand the risks before applying, as lenders may move quickly to recoup the losses of missed payments.

How much can I borrow with a secured loan?

A secured loan will typically offer between £1,000 to £250,000. But it depends on the lender and your own personal and financial situation.

What is a secured loan used for?

You can use a secured loan for a variety of purchases, including home renovation projects such as a new kitchen or an extension, buying a new car or even consolidating your debts.

What are the alternatives to a secured loan?

If you find a secured loan isn’t right for you, there are other options available to you:

  • A personal or unsecured loan might be more suitable if securing an asset like your home isn’t an option for you.
  • A guarantor loan is also a potential option if your situation fits the criteria. This type of unsecured loan requires a family member or friend to guarantee to pay back the loan if you’re unable to. A good option if you have a poor credit history.
  • Remortgaging is an alternative if you’re happy to use your home to acquire the money you need. You may also be able to find a better mortgage deal than your current one!

Can I get a secured loan with bad credit?

If you have a poor credit history, getting approved for a loan can be difficult, but there are options available to you. Some lenders can offer loans to people with bad credit, but at a higher interest rate. Find out more about bad credit loans.

Will getting a secured loan help my credit score?

If you make all your monthly repayments on time and in full, you may see your credit score improve in just a few months. This is because it shows you’re able to borrow a large sum of money and responsibly pay it back to the lender.

Will someone value my home when I take out a secured loan?

Once you’ve applied for a loan, your chosen lender will arrange for a chartered surveyor to value your home. As soon as the valuation is complete, the lender will then be able to offer more solid terms on your loan, including how much they’re prepared to lend you.

Will I be able to pay off my loan early?

This depends on the lender. Some will allow you to make early repayments, but others will charge. For a better idea, it’s worth contacting a lender you’re thinking of applying to and asking them for clarification.’s Secured Loan solution is offered by Monevo Limited. Monevo Limited (Monevo) acts as a credit broker not a lender. Monevo Limited (Monevo) is an Appointed Representative of Quint Group Limited (Quint), and is entered on the Financial Services Register under reference number: 723672. Quint is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference number: 669450. Monevo is registered in England and Wales (Company number 06511345). Registered office: Glasshouse, Alderley Park, Nether Alderley, Cheshire, SK10 4ZE. Licensed by the Information Commissioners Office, (Registration number Z1498441).