How much can you borrow with a secured loan?

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Your home may be repossessed if you do not keep up repayments on a loan secured against it.

I’m thinking about using a secured loan – how much can I borrow?

A secured loan may allow more borrowing than some unsecured products, but the amount, full cost and risk depend on the lender and your circumstances. Security is not a reason by itself to borrow more.

Secured loans explained

A secured loan is a loan where the borrower uses one of their assets as collateral just in case they cannot keep up with monthly repayments. There are different types of secured loans, but the thing that ties them all together is that an asset is used as security and is stated as such within the credit agreement.

The agreement places the asset at risk if obligations are not met. Repossession follows the applicable legal process; check the lender and its relevant permissions before borrowing. See related guidance.

How does a secured loan work?

Some secured products pay a lump sum, while specialist facilities allow drawdown. A US-style HELOC should not be assumed to be a standard UK option; repayment terms depend on the agreement. See related guidance.

Permitted use depends on the agreement. A homeowner loan is not automatically unrestricted; tell the lender what every part of the borrowing will fund. See related guidance.

The money is repaid over a fixed period using monthly repayments. Within these monthly repayments, the borrower is repaying some of the principal loan amount and interest on that amount. You might be able to repay the loan early. If you do pay back a secured loan early, you may have to pay an early repayment charge.

What if I can’t keep up with my repayments on a secured loan?

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.

What can be used as security?

Secured borrowing can use property, vehicles or other assets permitted by the product. Home equity is a measure of remaining property value, not a separate asset from the house. See related guidance.

The lender and product specify acceptable security and ownership requirements. Check existing finance and charges before offering an asset.

Niche assets for secured loans

Specialist asset-backed loans can use items such as valuable art, but availability, minimum values and borrower criteria vary. They are not universally restricted to VIPs.

Secured vs unsecured loans

The opposite of a secured loan is an unsecured loan. The difference between a secured loan and an unsecured loan is that unsecured lenders do not ask the borrower to use an asset as collateral within the credit agreement. If you do not keep up repayments on an unsecured loan, the lender cannot repossess any asset and sell it to recover the debt – at first!

The unsecured loan provider could take you to court and ask the judge for permission to enforce the debt. One method of debt enforcement is using bailiffs. These enforcement officers can repossess goods and sell them if you don’t work out a way to pay off the debt, and they charge hefty fees that are passed on to you.

What are the benefits of a secured loan compared to an unsecured loan?

A secured product may offer a different amount, rate or term, but does not remove credit and affordability checks. Compare the full cost and asset risk.

Is it easier to get a secured loan?

This forum user on MoneySavingExpert also wants to know if a secured loan is easier to get than an unsecured loan.

Secured borrowing is not automatically easier to obtain. Property value and charge priority matter alongside affordability, credit and other criteria.

However, when you apply for a secured loan, the lender must complete an affordability assessment and check your credit history. If the loan is deemed unaffordable to you or your credit score is too low, you can be rejected for the loan.

Can I borrow more with a secured loan?

There is no universal £25,000 unsecured-loan ceiling or rule that borrowing above it should be secured. Compare suitable products, costs and risks for the amount needed.

But, the loan amount available to you will still depend on personal circumstances and your credit history.

You could consider using a credit broker to get the best secured loan available to you. A credit broker is someone who works as a middleman to find suitable options that match your needs, and they may help you find a deal that you might have missed.

A broker may charge a customer fee, receive lender commission or both. Obtain the remuneration disclosure; ongoing repayment deductions are not a universal arrangement.

Secured loan – how much can I borrow?

How much you can borrow using a secured loan depends on many factors being considered together:

The type of secured loan you use (more on this to follow)
Your income
Your existing debts
The lender’s loan-to-value ratio
Your credit rating

Affordability includes acceptable income, existing commitments, essential spending and relevant future changes. It is not decided by one universal debt-to-income ratio.

Higher income and lower commitments may improve affordability, but property, credit and product limits still apply.

It can be worth trying to improve your circumstances before you apply for a loan in order to be able to secure more borrowing. You can try to reduce other debts, increase your income where possible, or work on improving your credit score.

What is the maximum loan amount you can borrow?

Loans secured with assets come in different forms. You could argue that it is a mortgage that allows you to borrow the maximum amount of money. These are considered a type of secured loan and allow you to borrow hundreds of thousands of pounds in some cases.

Homeowner loans, often called second-charge mortgages, can provide additional borrowing against an already mortgaged property. The maximum is product- and applicant-specific.

A homeowner loan uses the property as security. Equity is its current value less all secured debts.

How do I work out how much home equity I have?

For example, a £300,000 property with only a £150,000 mortgage has £150,000 equity. Include any other secured debts when calculating the figure.

At an assumed 85% combined loan-to-value limit, the £300,000 home could support £255,000 total secured borrowing. Less the £150,000 mortgage, that leaves £105,000 of potential extra borrowing before fees and other criteria—not £127,500. Actual limits and affordability may be lower.

How are monthly repayments calculated?

Your monthly repayments are calculated based on the amount you want to borrow, the interest rate you are offered and the repayment term chosen. The timescale you have to repay will determine how many monthly repayments you will need to make. Online calculators on lender websites make this easier to understand.

What credit score is needed for a secured loan?

FCA rules set requirements relevant to the product, including affordability and creditworthiness assessment. Lenders also set their own criteria, so outcomes differ; this does not mean no regulatory standards apply.

Consequently, when they check your credit history, there is no fixed credit score that will ensure you get approved – or a score that means certain denial. It depends on the lender and the rest of your application, including your income and existing debts.

Yet, having a good or excellent credit score could mean lower interest to pay. You might want to check your score before applying to make sure there are no erroneous records.

How many secured loans can I have?

There is no simple fixed maximum number, but affordability, existing agreements, title restrictions, consent and charge priority can prevent additional secured loans. See related guidance.

The lender assesses the resulting combined borrowing against the property value and its criteria. Equity alone does not determine approval and borrowing limits do not eliminate negative-equity risk.

On top of this, home equity loans and alike may have a minimum loan amount, which in some circumstances could prevent you from securing other debts against home equity.

Secured loan – how much can I borrow? (Recap!)

Borrowing limits vary by product and applicant. Secured loans can offer substantial amounts but there is no universal unsecured £25,000 cap or entitlement to £100,000 of secured credit.

Yet, the amount you can borrow also depends on personal circumstances, not least your income, existing debts and your credit rating. You should only be approved for a loan that is affordable to you, and your credit score might prevent you from taking out as big a loan as you want.

Remember that a secured loan does put your asset at risk. You should always think carefully before securing a debt with an asset, especially your family home or home equity.

More secured loan information, FREE!

We’ve just published an array of new articles and guides all about secured loans, answering readers’ most asked secured loan questions. From monthly repayments to interest rates and much more, learn everything you need to know about these loans here at MoneyNerd!