Home equity loans in the UK: comparing lenders and brokers

If you're keen to understand more about home equity loan companies in the UK, you're in the right place.

In this article, we’ll cover:

•  What a home equity loan is and how it works
•  The true cost of a poor home equity loan
•  The difference between a home equity loan and HELOC
•  How much you can borrow and repayment terms
•  Where to get a home equity loan and how to choose the right one

We understand that the world of home equity loans can seem complex. You may have worries about the cost, the terms, or choosing the right lender. But rest assured, we’re here to make things clearer.

Where can you get one?

UK homeowners can compare remortgages, further advances and second-charge mortgages, depending on circumstances. Specialist brokers may help with second charges; a US-style HELOC is not a standard substitute for these products.

Whenever you search for credit, only entertain options from legitimate lenders that are authorised and regulated by the Financial Conduct Authority. 

These historic provider names are not a verified current ranking or product panel. Check current availability, the firm’s FCA permissions and whether it is a lender or broker before relying on an offer.

Remember that the interest rate advertised may not be what you’re offered even if approved. Your credit history and income will determine how much interest you are charged. 

Loan Companies 

Bank home equity loans

Check whether a bank offers additional borrowing on its own mortgage or a remortgage. This is different from offering a second-charge loan or a revolving HELOC.

Do not assume US Barclays or Santander home-equity products are available in the UK. A bank not offering later-life equity release may still offer remortgages or further advances; verify the specific UK product.

Online home equity loans

Online home equity loans are found with online lenders, including companies marketing themselves as an online bank. By searching your options online you can come across many companies, some of which you may have never heard of before. Make sure you only apply to UK lenders as the search engine can throw up many results from the USA as well. 

Building society home equity loans

Building-society products vary. Ask about the actual purpose, security and repayment structure rather than relying on a broad “home equity” label.

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.

What is a good interest rate?

For mortgage borrowing, compare the personalised illustration, rate, APRC, fees and total cost. Consumer-credit representative APR rules should not be indiscriminately applied to mortgage illustrations.

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. A lower credit score does not generally qualify you for a lower rate; lenders use their own risk and affordability assessments.

What is the minimum credit score needed?

There is no fixed minimum score you need on your credit history to secure a home equity loan or HELOC. The decision to approve or reject your application will take into account your credit score, but it is not the only factor within the decision. For this reason, there is no absolute minimum score required. Some people may get approved with a worse score than someone with a slightly better score. 

A strong credit record may improve options, but no score guarantees the lowest rate.

Is it worth getting a loan?

Whether a home equity loan is worth it for you is impossible to say without knowing all about your finances, credit score and alternative options. 

Only by looking at the whole picture will you know if these loans can benefit you, which is why it’s recommended to speak with free money advice groups like Money Helper and Citizens Advice or get professional financial advice from a commercial company. 

The loan is secured on the property. Missed payments can lead to repossession through the applicable legal process; security does not remove affordability checks or give the lender an automatic right to take the home without that process. Compare alternatives and the total cost before proceeding.

A Loans Warehouse customer’s experience

Individual experiences vary. Compare the total cost, fees, repayment term and risks before applying. A lower monthly payment may mean paying more overall, and secured borrowing puts your home at risk if repayments are not maintained.

Polly

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

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

What term can I spread my repayments over?

Terms depend on the actual product and affordability. Revolving or drawdown facilities may have separate draw and repayment conditions; verify their current UK availability.

How much can I borrow?

Loan-to-value compares secured borrowing with the property’s value, not with the equity alone. A second-charge lender normally considers the existing mortgage and proposed loan together, alongside affordability and credit criteria. There is no universal percentage of equity you can borrow.

Illustration only: with an 80% combined loan-to-value limit, a £200,000 home and £100,000 mortgage leave a theoretical £60,000 for extra secured borrowing before fees and other criteria. This is 80% of the property value less the existing mortgage, not 80% of the equity.