What Is the Secured Loan Approval Process?
Loans Warehouse is a credit broker, not a lender. Approval and terms depend on checks. Compare fees, interest and the total amount repayable. A longer term may increase the overall cost. MoneyNerd introduces enquiries and may receive a referral fee.
Your home may be repossessed if you do not keep up repayments on a loan secured against it.
Loans Warehouse is a credit broker, not a lender. Approval and terms depend on checks. Compare fees, interest and the total amount repayable. A longer term may increase the overall cost. MoneyNerd introduces enquiries and may receive a referral fee.
Your home may be repossessed if you do not keep up repayments on a loan secured against it.
This easy guide will help you understand what a secured loan is, how it works, and what you need to do to get one.
This guide explains the main options, conditions and risks to discuss with a qualified adviser.
In this guide, we’ll cover:
- What a secured loan is.
- How a secured loan works.
- The true cost of a bad secured loan.
- How to get approved for a secured loan.
- How long a secured loan takes to complete.
Review the actual fees and early-repayment terms of any offer. An old market statistic does not establish your current costs.
Don’t worry; we’re here to help you make the best choice.
How does it work?
The secured loan approval process goes something like this:
- You apply for the loan by entering your personal data, income, property value, etc.
- You have to supply documents and proof to back up the statements you make in the application, such as evidencing ownership of the property or your income.
- The lender finalises the application and may need to complete further checks, including a check of your credit report.
- If the application is accepted, review the formal offer and any applicable reflection period, complete legal and security requirements, and agree the completion and payment arrangements.
There may be variations depending on the lender’s processes.
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.
Secured Loan Case Study
Check out the table below for a snapshot of how secured loans work, including what lenders and borrowers need to consider.
If you want to learn more about the risks and benefits of secured loans, be sure to read our specialized guide.
| Category | Illustrative example |
|---|---|
| Background | Fictional example: John is a homeowner considering £20,000 for renovations. This is not a real customer story or a lending offer. |
| Application | A lender would assess property value, existing borrowing, income, expenditure and credit history. Approval is not guaranteed. |
| Costs | John would compare personalised APRC, fees, monthly payments, repayment term and total repayable. Rates and terms vary; no rate or monthly cost is assumed here. |
| Potential benefit | A secured loan might provide funding while retaining an existing mortgage, but other funding options could be cheaper or more suitable. |
| Risks | John’s home may be repossessed if required payments are missed. Fees, early-repayment charges and a longer term can increase total cost. |
| Possible outcome | The result depends on affordability, payments, interest rates and property values. Neither a higher credit score nor an increase in property value is guaranteed. |
What happens when you apply for a secured loan?
After you have applied for a secured loan, you’ll need to await the lender’s decision.
If the loan has been secured by home equity – which is highly likely – then the lender may need to confirm your amount of equity.
To do this, they would need to value the property.
Sometimes, this requires the lender to send surveyors out to the property to complete an in-person appraisal.
However, in modern times, many lenders are able to accurately value properties remotely using sophisticated technologies and data.
In a nutshell, you may need to wait until after a property appraisal before the lender reaches out and tells you its decision.
Funds are released only after the offer conditions and required legal work are completed. The first payment date and schedule are set out in the agreement, not automatically immediate on approval.
Explore secured loan options
Loans Warehouse is a credit broker, not a lender. You can enquire about options based on your circumstances. Approval and terms depend on lender checks; an enquiry is not a guaranteed offer.
Compare the interest rate, fees, monthly payments and total amount repayable. A longer repayment term can increase the overall cost. Consolidating unsecured debts into a secured loan puts your home at risk.
MoneyNerd introduces enquiries to Loans Warehouse and may receive a referral fee. Broker and lender fees may apply and should be explained before you proceed.
Your home may be repossessed if you do not keep up repayments on a loan secured against it.
Is it easier to get approved?
A secured loan is not automatically easier to obtain. The lender still assesses affordability, credit history, property and its own criteria.
Security can reduce some lender risk but creates a significant risk for the borrower.
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.
Amounts and rates vary. Compare fees, term and total repayment as well as interest, because secured borrowing can cost more over a longer period.
But it’s important to realise these benefits in conjunction with the risks.
Your home or other secured asset is at risk of repossession if payments are not maintained.
If you fail to make repayments on a secured loan, it will also affect your credit score and, therefore, your ability to borrow in the future.
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.”
Reviews shown are for Loans Warehouse. Search powered by Loans Warehouse.
Do I need proof of income?
You’ll need to prove your income as part of the secured loan application process.
Even though the loan is secured with an asset, the lender still needs to make sure the loan is affordable to you, which requires them to ask for proof of your income.
Affordability covers acceptable income, commitments, essential living costs and relevant future changes. It is not decided by a debt-to-income ratio alone.
Most people choose to prove their income with recent payslips.
You may need as many as three. Some other people with other sources of income could choose to prove their income with bank statements, letters from their accountant, or HMRC tax returns.
How long does it take to complete?
Completion times vary with the product, lender, valuation, legal work and documents. Ask for a current estimate; two to six weeks is not a universal promise.
The reason that a secured loan takes much longer than unsecured lending applications is that more checks are required. The lender may even need to complete a property appraisal (re-valuation).
References
