Secured Debt Consolidation Loans Reviews & In-depth Info

Secured Debt Consolidation Loans

Secured debt consolidation loans could be the answer to your debts. You can consolidate existing debts with a secured debt consolidation loan, allowing you to reduce your repayments each month. 

We discuss secured debt consolidation loans here, and where the best three secured debt consolidation loans can be found. 

What Is a Secured Loan?

A secured loan is a type of loan that has an asset listed as collateral against the credit you receive. 

For example, some loan providers will lend you money if you grant them ownership of an asset if you fail to repay, such as a watch or another valuable item. The asset helps the loan provider lend you the money because even if you don’t repay, they can legally take possession of the asset listed as collateral. 

They won’t take possession if you keep to the repayments. 

But loans where you list these types of assets as collateral are quite rare. The most common type of secured loan is a mortgage

With a mortgage, you borrow money from a mortgage lender to pay for a home, but the property is the asset which is secured. If you don’t keep up with repayments, the lender can seize the property back. 

What is debt consolidation?

Debt consolidation is a strategy to make debt repayments easier to manage and to make them somewhat cheaper. It is used by people who have multiple existing debts, such as credit cards, store cards and unsecured personal loans. 

To consolidate debts the debtor must take out new credit and use the money to pay off all their existing debts. Be aware, they may have to pay early repayment charges on each individual debt. Once debt consolidation has been achieved, the debtor only needs to manage one monthly repayment.

Why consider debt consolidation as a solution?

Debt consolidation is just one strategy to overcome debt in time, and there are other debt solutions you could consider. There are two main reasons to consider debt consolidation. These are:

  1. By securing credit with a lower interest rate compared to the interest rates being paid over the multiple debts, the debtor can save money going forward. However, they will also need to factor in any early repayment charges to make sure consolidating debts does make it cheaper. 
  2. Merging debts together makes it easier to keep up monthly repayments. With only one monthly repayment to manage instead of multiple repayments at different times of the month, the debtor has less chance of missing payments and having defaults recorded on their credit history. 

The different ways to consolidate debt

There are different ways to consolidate debts. The most common method is to take out a debt consolidation loan

If you just want to consolidate credit card debts, you may want to consider a balance transfer credit card where multiple credit card balances are transferred to one credit card, usually with an introductory interest rate of 0%. There may be a balance transfer fee to pay on each card balance transferred. 

Another way to consolidate debt is to remortgage for debt consolidation, which is where you borrow extra on your mortgage to pay off other debts. 

Or you may want to consider a Debt Management Plan, which merges your debts into one payment without actually consolidating them. 

What Is a Secured Debt Consolidation Loan?

A secured debt consolidation loan is a loan just like we described above. However, the money you lend is used to pay off multiple other debts, known as debt consolidation.

Debt consolidation is a strategy used to consolidate the number of debts you owe by taking out a new loan or credit card. The new loan or new credit card must have a lower rate of interest than the interest on all debts you pay off with it. This will make repayments cheaper and debt consolidation worth it.

Secured debt consolidation loans are rare, except for remortgaging for debt consolidation. You don’t usually hear of people taking out a secured loan with an asset like a computer or watch to consolidate debt, but you frequently hear about remortgaging for debt consolidation. 

How Does Remortgaging for Debt Consolidation Work?

Remortgaging is when you switch your current mortgage deal for a better interest rate. The deal you received when you bought your property may have been favourable at the time, but mortgages can get better (or sometimes worse) over the years.

Just like you switch your internet provider for a cheaper deal, you can switch your mortgage for a better deal, known as remortgaging.

When you remortgage you can free up a lump sum of cash and this can be used to pay off existing debts. Thus, you consolidate your debts through a new mortgage with a lower interest rate than your debts. 

Remortgaging for debt consolidation can reduce monthly payments with lower interest, but you might pay back more in total because the mortgage lasts a lot longer.

What is the risk of a secured debt consolidation loan?

The risk of taking out a secured debt consolidation loan is that you find yourself in a situation unable to keep up your monthly repayments. If you have multiple payment defaults, the lender has the right to repossess the asset you used as collateral in the loan agreement. 

This asset will then be sold and the money raised will be used to clear all your debt with the lender, including arrears and fees. Any remaining money from the asset sale will be given back to the debtor. If you secure the loan with your home and do not keep up with monthly payments, your home may be repossessed. 

All secured loans have this risk and it may make you want to use an unsecured debt consolidation loan instead. However, secured debt consolidation loans may provide bigger loan amounts at a lower interest rate compared to an unsecured debt consolidation loan – personal finances and credit score depending. 


How do I search for secured debt consolidation loans?

You can search for these loans online. They are widely available through banks and online loan lenders. You can even find them advertised through some UK supermarkets. 

When you search online, you’ll notice that most lenders advertise secured debt consolidation loans with a loan calculator. This calculator allows you to enter the loan amount needed and how long you want to repay. Using this information, the calculator will show your projected monthly payments and the interest you will have to pay.

However, the rate used is the representative example Annual Percentage Rate and is only active just over half of the time for approved applicants. You may be offered a higher or lower rate based on personal circumstances and your credit score.  

Who Are the Best Secured Debt Consolidation Loan Providers?

At the time of researching and writing, the three options below represent the best secured debt consolidation loans we could find (remortgaging). Always do your research and see what is new on the market. You might find something better that has just been released. 

#1: Lloyds 

The lowest rate we could find was with Lloyds Bank. They are offering a remortgaging fixed rate as low as 1.09%, rising to 3.3%. Be aware that they also come with product fees – this is normal – and the fee for this one is set at £1,499.

#2: Santander 

Santander offers a comparable deal with a low initial rate of 1.14%, increasing to 3.1%. However, the product fee is cheaper than Lloyds above at just £1,249.

These rates are subject to change and additional fees could be applied. 

Secured debt consolidation loans – an example

One example of a secured debt consolidation loan is available at Barclays Bank. This is not necessarily the best secured loan available to consolidate debts and is being used as an example only. You should do your own research. 

Barclays offers a secured debt consolidation loan of up to £50,000 with a maximum repayment term of up to 10 years. The amount you want to borrow and the loan repayment term affect the representative interest rate. For example, loans between £7,500 and £15,000 have the lowest representative example of 7.3%. The maximum rate they will offer anyone who gets approval is 20.9%. 

You should only consider using a lender that is authorised and regulated by the Financial Conduct Authority.

Other Secured Debt Consolidation Loans Worth Considering

These current deals all come from the mainstream banks, you should check the other big names, but don’t be afraid to look for lesser-known lenders. Some of the better remortgaging deals are not on the high street. 

Before You Apply for a Secured Debt Consolidation Loan

Before you apply to remortgage your home for debt consolidation, you need to take the same steps you took when first applying for a mortgage. This includes checking your credit file for mistakes, and if you find them, get them removed.

You might also want to speak with debt charities and mortgage specialists to make sure remortgaging for debt consolidation is your best option.

Other debt solutions exist that could be more advantageous for you. 

Can I get a secured debt consolidation loan with bad credit?

A secured loan is generally considered a little easier to get approved for compared to an unsecured loan. The reason for this is because using an asset as collateral reduces your lending risk. The lender feels it easier to get its money back when the loan is secured. Consequently, it is also considered easier to get a secured debt consolidation loan if you have a low credit score compared to unsecured debt consolidation loans. 

Having a low credit score may still get you approved but you might be offered a higher interest rate than what is advertised through the representative example. There are some debt consolidation loans advertised exclusively for people with a low credit score. 

We’ve written a post all about debt consolidation loans for people with bad credit here!

Can you get a debt consolidation loan without collateral?

As mentioned – and it is worthwhile remembering – you can get a debt consolidation loan without needing to list an asset as collateral. Unsecured debt consolidation loans are also a popular way to merge debts together. They present less immediate risks if you cannot pay the loan but they do not typically offer as much credit and the interest rates may not be as favourable. 

It’s also a good time to add that unpaid unsecured loans can still result in assets being repossessed. In this instance, the creditor could take you to court and ask a judge to allow them to enforce the debt with bailiffs. These people can come and take your valuables and sell them at auction if you don’t agree to pay. They also charge fees that are passed to you. 

What is the safest way to consolidate debt?

There is no single debt consolidation method that is safer than another method. For example, using a debt consolidation loan is not always safer or less safe than remortgaging for debt consolidation or using a balance transfer credit card. 

Rather, the safest way to consolidate debts is to be meticulous in your research and find a method that will provide you with savings. This involves more than comparing interest rates, which can be difficult when comparing one rate against multiple others on each debt, while also factoring in other fees and charges that may be applicable. 

Getting free or paid-for help may in fact be the safest way to avoid the pitfalls of consolidating debts. 

More Help Finding a Secured Debt Consolidation Loan

If crunching numbers and searching for the right secured loan is not your forte, you can get personalised help and support. Secured loan comparison websites can help you compare options swiftly and can be a good starting point. Or you could receive a more holistic service using a credit broker. You may be charged credit broker fees, but on the other hand, it will make the process easier, faster and could get you a better deal than if you searched independently. 

Another fantastic tool to help you locate the best secured loans for debt consolidation is at USwitch. Just like you might use this site or their agents to find better utility deals, they have an online tool to find the best remortgaging deals.  

Read More Debt Consolidation Advice at Money Nerd!

If you have further questions about debt consolidation or secured debt consolidation loans, check out our recent posts on Money Nerd. 

We frequently dive into this subject – and many other topics to help you overcome your debts


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  • Affordable repayments with an end date in sight
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