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Home Equity Loan Companies UK – How to Get Credit

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Scott
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Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

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&
Janine
Janine Marsh Profile Picture

Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Jan 15th, 2024
Looking for a loan? £5,000 to £2.5 million available, compare deals below.

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Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable.

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Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable

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Home Equity Loan Companies UK

Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable

If you’re keen to understand more about home equity loan companies in the UK, you’re in the right place. Each month, over 6,900 people visit our site to learn about secured loans.

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.

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How much do you want to borrow?

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Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable

Where can you get a home equity loan?

You can get a home equity loan or HELOC from banks, building societies and financial institutions operating online only. Although they are harder to find than looking for an unsecured loan or standard banking product. Some of the biggest UK banks don’t offer them at all. 

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

We have compiled a selection of companies that offer home equity loans. These are listed as examples of where to find them only and are not necessarily the best home equity loan options. You should search the whole market or engage with a professional to do it for you. 

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. 

Home equity loan companies 

Bank home equity loans

When searching for home equity loan companies, banks are probably one of the first places you think to look. Many UK banks do offer these products, but it is more common to find HELOCs rather than home equity loans with your high-street bank. 

Barclays Bank currently advertises home equity loans, whereas Santander and others are advertising HELOCs. Some banks stay away from these products. For example, HSBC currently does not offer any loans or mortgages that enable equity release – subject to change. And many others focus on lifetime mortgages only (explained at the end of our guide). 

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

Fewer building societies offer these loans, but you may be able to get them from the bigger and well-known building societies. But again, even these companies typically focus on releasing equity in later life rather than simple equity loans and HELOCs. 

» TAKE ACTION NOW: Compare deals from the UK’s leading lenders

What is a good home equity loan rate?

Home equity loans are advertised with a representative example interest rate. This is the rate of interest at least 51% of applicants were offered after applying. You could be offered a lower or higher interest rate based on your finances and credit score. Thus, the best home equity loan for one person may not be the best for another. It all depends on the degree to which lenders view you as a risk or not. 

Nevertheless, some recent research that is subject to change states that home equity loans and HELOCs have an average interest rate between 2% and 9.9%. The lower your credit score and the shorter the repayment period the more likely you will get a rate at the lower end of that spectrum. 

Change the amount you are looking to borrow to see what offer you could get

£

Lender

APRC

Monthly payment

Total amount repayable

United Trust Bank Ltd

6.34%

£219.34

£26,320.83

Pepper Money

6.86%

£220.24

£26,429.17

Together

7.99%

£222.20

£26,664.58

Selina

8.45%

£223.00

£26,760.42

Equifinance

9.95%

£225.61

£27,072.92

Evolution

10.2%

£226.04

£27,125.00

Spring

10.5%

£226.56

£27,187.50

Loan Logics

11.2%

£227.78

£27,333.33

Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable.

Search powered by our partners at LoansWarehouse.

What is the minimum credit score needed for a home equity loan?

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. 

However, to access the best interest rates you will require at least a good credit score, preferably an excellent score. 

Is it worth getting a home equity 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. 

Equity loans help scores of families the length and breadth of the UK each year for a multitude of purposes. They come with some risk, but using them correctly offers a lot of credit at a smaller cost for many. 

Home equity loans for all purposes

  • Stuck paying high interest on credit card debts & loans?
  • Looking to fund a home improvement project?
  • Dreaming of finally taking the once-in-a-lifetime trip?

Polly

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What term can I spread my repayments over?

Home equity loans and home equity lines of credit are offered with similar repayment periods. You can expect a loan term anywhere from 5 to 25 years, subject to your ability to repay within that repayment period.  

How much can I borrow?

The amount you can borrow with a home equity loan or an equity line of credit is based on a loan to value ratio with a maximum of 80%. The maximum loan available is determined by the value of the asset used as collateral. Remember that the asset is not your home exactly, but rather, the home’s equity. 

So, if you have £100,000 equity you might be able to borrow as much as £80,000. However, the period of time needed to repay (loan term), as well as your income and credit score could reduce how much you can borrow. 

Get your home equity loan deals

Looking for a loan? £5,000 to £2.5 million available, compare deals below.

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The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Financial Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.