How to compare secured loans

Understanding secured loans may seem tricky, but you're in the right place.

Secured loans might be a good way for some people to borrow money. They can sometimes offer lower rates and easier repayments. But it’s important to know how they work and understand the risks.

In this guide, we’ll explain:

• What secured loans are.
• How they work.
• The cost of a bad secured loan.
• If you can pay back a secured loan early.
• How to compare different secured loans.

We know that taking out a loan can be a big step. It might feel scary, especially if you’re already in debt. But remember, you’re not alone. Many people are in the same boat, and we’re here to support you with clear, simple advice. Let’s learn more about secured loans together.

Where is the best place to get one?

There is no single best place to get a secured loan because lenders frequently change the type of secured loan deals on offer. To find the best deals, you must compare secured loans online.

Moreover, the secured loan deal will be determined by your personal circumstances, including income and credit score. Thus, one person may find the best secured loan for them with lender A, and another person may find the best deal for them at lender Z.

Enquire about a secured loan through Loans Warehouse, a credit broker, not a lender. Approval and terms depend on checks. Compare the full cost before applying. MoneyNerd may receive a referral fee. Your home may be repossessed if you do not keep up repayments on a loan secured against it.

Which banks offer them?

Banks may offer mortgages or further advances, while second-charge products often involve specialist lenders or brokers. Check the particular product rather than assuming every bank offers a standalone homeowner loan.

However, some banks may not advertise secured loans, and you may need to discuss your options in a branch. You might need to make an appointment in advance.  

Where else can I get a loan?

Along with UK banks, secured loans are also available from online loan lenders. Be careful if you take out a secured loan from an online lender, as they may be acting as a broker, not a lender. 

Some online loan websites give the impression that they are offering loans secured directly when, in fact, they are a credit broker. These sites scan partnered loan providers to compare options and find you a loan. This may sound tempting and an easy way to compare secured loans “hands-free”, but you may not get the best deal and might have to pay a fee or commission to the broker. 

If you decide to use a direct lender or broker, remember that it is crucial they are governed by the Financial Conduct Authority. 

How do I compare my options?

Getting a secured loan starts by comparing your options. Unfortunately, this isn’t as straightforward as you might think – but it’s by no means impossible. 

For a regulated consumer-credit promotion using a representative APR, that rate or lower must be expected to apply to at least 51% of credit agreements entered into as a result of the promotion. It is not a promise to 51% of everyone who applies, and the rule should not be applied indiscriminately to mortgage APRC illustrations.

Using an online calculator

A calculator estimates payments using its stated amount, rate and term. It is not a lending offer, eligibility confirmation or suitability assessment. Compare the personalised terms and total cost before applying.

An estimate depends on the inputs, not whether a score is “decent”. A more personalised quote may involve a credit search; confirm whether it is soft or hard.

A Loans Warehouse customer’s experience

Individual experiences vary. Compare the total cost, fees, repayment term and risks before applying. Securing borrowing against your home puts it at risk if you cannot keep up repayments.

Polly

“This was by far possibly one of the nicest experiences I’ve had getting a secured loan.”

Compare deals

Reviews shown are for Loans Warehouse. Search powered by Loans Warehouse.

Should I use a comparison website?

Loan comparison websites are third-party websites that can quickly and easily give you an overview of secured loans on the UK market at the time of your search. They can be extremely useful in identifying different options and can save you lots of time.

It may be worth using these loan comparison websites, even if it is just to do a preliminary search before you do independent research. 

Who can help me?

To get help to compare loans, consider using a financial adviser or loan broker. These People and companies can search and compare all types of secured and homeowner loans on your behalf, equipped with expert knowledge.

However, they do come at a cost, and they may or may not save you money overall. 

How much does it cost?

You repay the capital borrowed, interest and any applicable fees. There is no universal 2–5% closing fee or reliable current rate range in this guide. Obtain a personalised illustration showing the full repayment schedule.

Rates and eligibility change and depend on the product and your circumstances. Obtain a current personalised quotation or mortgage illustration and compare the total cost, fees, rate type and repayment terms; figures in this article are not live offers.

The interest rate you are offered depends on your personal circumstances, and someone with a better credit score than you could get a lower rate using unsecured loans than you get using a secured loan.  

What are some examples?

To give you an idea of the variety of secured loans available, here are some examples:

1. Generic secured loans
2. Second-charge mortgages, also known as homeowner loans
3. Debt consolidation loans (also available as unsecured credit) 
4. Home improvement loans (also available as unsecured credit) 
5. Guarantor borrowing, only if the actual agreement also takes security; a guarantee alone does not make a loan secured

Remember to only consider the above when advertised by an organisation that is authorised and regulated by the Financial Conduct Authority. 

Can you get a fixed-rate loan?

Secured loans may be offered with either a fixed interest rate or variable interest rate. 

A fixed rate stays unchanged for its agreed period, which may be shorter than the full term. Check the payment and rate after that period; it does not necessarily fix the total lifetime cost.

A variable rate changes according to its contractual basis, which may reference a base rate or the lender’s variable rate. Allow for possible payment increases.

A US-style home equity line of credit (HELOC) should not be assumed to be a standard UK product. Any UK revolving or drawdown secured facility has its own availability, fees and payment terms. Check whether interest or capital payments are required during the drawdown period and how the balance must be repaid. See related guidance.

Check whether the offered loan is fixed, variable or a combination and what fees or charges apply when a fixed period ends.

What credit score do I need?

There is no minimum credit score you must have to get a secured loan. Applications for secured loans are judged on the entirety of the application, including income and existing debts, to conduct an affordability check and a credit score assessment. 

Each lender can apply its own test to either approve or deny the loan and therefore, there is no absolute credit score you must have that applies to all lenders.