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What is a 'Secured Loan with Bad Credit'?

Perhaps you have had current or previous bad credit due to the pandemic 2020's, a previous redundancy, family circumstances or poor health? As such, you now have a credit history of some unpaid regular bills & missed payments?

So, what are bad credit secured loans uk? They are loans secured against property legally you own or a 'second charge secured loan' because the lenders will have 2nd charge priority behind a main (or first charge) primary mortgage.

Loans secured against your property are often also commonly referred to as 'second mortgages', 'home equity loans' or just simply 'secure loans' in the UK.

Then like your main mortgage provider, your secured loan lender can also effectively legally recover your property, in order to recover their loan and any legal costs incurred.

The nature of 'secured loans with bad credit' is that it is legally secured to assets that you may own ie; usually your residential property or other substantial assets you may own.

By using your own home as security or collateral, you are now reducing the risks that any secured loan provider may not be able to recover what they are owed, in the event that you should defaults on your repayments.

As a result of this, certain specialist lenders are still willing to provide viable financial loans to some people, even if you have a good, average, bad, adverse or poor credit history profile.

Secured loans for bad credit are therefore useful to some people in situations where they are uncertain what to do next.

This now means you would have 2 mortgages on your property. As such, we will examine in this review how does a secured loan with home as collateral work for homeowner bad credit loans? The pros & cons associated with taking one out. Then, some other alternative options to maybe consider than new homeowner loans bad credit status.

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Why consider a 'Bad Credit Secured Loan'?

Perhaps you would like to reduce your monthly outgoings by consolidating debts & outgoings eg; You have 7 credit cards costing you over £1,000pm+ and your income & outgoings have been affected by the cost of living crisis?

Or, it could be that you are interested in building a home extension as you are now working from home, but your current poor or bad credit history is hindering your access to funds.

With 'Secured Loans for Bad Credit', you may be able to borrow the money you now need to reorganize your goals and objectives.

A 'secured loan for bad credit' is often used as a way to raise further money against the equity within your own domestic property.

This maybe perhaps when it is not possible (or preferable) to increase the main first mortgage via a remortgage or further advance?

With a 'homeowner loans with bad credit ' broker deal, you may be able to borrow larger sum of money over a longer repayment term, than perhaps other types of unsecured finance.

Note: if you are considering consolidating existing loans & credit cards, be aware of the financial impact if you also extend the term of your 'secured loan with bad credit'. Whilst your payments may now be alot lower (which can help to manage your bills & outgoings) this will also increase the total amounts you repay.

Many 'secured loan with bad credit' lenders uk terms in the 2020's may also offer risk rated interest rates than say un-secured loans & for larger amounts.

The reason behind this is because as mentioned above those 'Secured Loans Bad Credit' providers potentially have a lower financial risk exposure ie; they always have recourse to seize back your house - should you be unable to meet all the regular loan repayments.

Note: Making regular repayments upon time to any secured loans for with bad credit via your lender is crucial to maintaining your credit status in the longer term

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What is a Bad Credit status?

Having a bad credit score is usually not a category that the secured loan providers use. So typically people's credit is rated as Excellent, Good, Fair, Poor and Very Poor.

So, you can say you have a bad credit status rating if you have a 'Poor' or 'Very Poor' credit score.

It may vary a little between agencies you may look at, but all the providers are able to access any or all of your credit history figures anyway.

The main thing to focus on is that if you have or had a bad credit history rating - then secured loan providers will be able to clearly see that and adjust their offerings to you accordingly.

You will find yourself in the higher risk lending categories if you have had a history of missed payments or you have a large amount of debt. This is the most obvious cause, but there are others.

If you are in a joint partnership with someone who has a poor or very poor credit rating, this can then bring your own credit score down.

You could also have a bad credit status by having little or no credit history at all ie; the lenders have no evidence of you borrowing money or paying it back, so may assume the worst in this case scenario.

Your credit history score is a number that is used by finance providers to assess how likely you are to pay back money loaned to you. These scores may fall into a number of categories.

It also shows as a potential borrower whether you are likely to make payments regularly & without delay. If you have missed any payments (for whatever reason) in the past you are more likely to get a bad credit rating.

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There are several main agencies that assess credit scores eg; Equifax & Experian. Each agency has its own particular way of working out a credit score for you and you can use these websites anytime to find out your credit status, often via a soft search.

This credit score places you into a band that secured loan lenders can look at when they are considering whether to offer you any finance.

However, all of these credit ratings mean broadly the same thing ie; they have a credit scale that goes from very bad to very good, with your individual credit score falling into one of these bands.

You are given a credit points score based on your finance history, whether it is a loan, mortgage, credit card or other finance.

Your current financial commitments are taken into account, for example monthly credit card payments, mobile phone contracts or insurance payments. They also look at how many credit cards you have and even how you manage your bank account.

Other factors are considered as well, including how long you have lived at your current address and whether or not you are employed. Also, whether if you are registered to vote and if you have any county court judgments against you for failing to pay fines or debts.

Our UK finance brokers have helped people in the past who thought it maybe difficult 'securing a loan with bad credit' - even those who have been previously bankrupt. Please contact us >

Can you get a 'Secured Loan with Bad Credit?

We are often asked as brokers, can you get a secured loan with bad credit?

Usually, your ability to use your equity in your home will depend (apart from your actual home values), on you being able to show a good track record at paying off your main mortgage ie; are you a good finance risk?

This usually means you being up to date with your regular monthly mortgage and bill repayments & paid on time. However, if you do have bad credit, then we may still be able to help you get a deal.

For bad credit secured loans, lenders must also still comply with FCA responsible lending & financing rules (that also cover your main first charge home mortgage).

This means therefore for secured loan providers, they should still carry out the same affordability checks or various loan to income limits, which are all regularly reviewed by the FCA regulators.

A few years ago this meant any homeowner loans with bad credit lending must also stress test your ability to meet both current and future payments. However despite much debate, these rules for were maybe set to change in 2022.

  • Using your Home for a secured loan also means you will now have more than one loan on a property at anytime
  • Any secured loans bad credit calculator means for most Lenders they will take all your existing monthly repayments into account, for their affordability calculations
  • Your ability to get secured loans for bad credit uk depends on (amongst other things) your likelihood to be able to meet both 1st & 2nd charge payments

Can I get a homeowner loan with bad credit? Unsure & need broker help then, Please contact us about a 'Secured Loan for bad credit' enquiry >

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How to get a 'Secure Loan for Bad Credit' deal?

Many people due to the pandemic & cost of living crisis 2020's have had their financial lives turned upside down.

One minute things may have been okay financially ...& the next minute your finance credit history may have taken a turn for the worst?

You maybe one of those people & are now concerned about How to get a 'secure loan with bad credit'?

Having bad credit when it comes to borrowing money is never perfect, as many mainstream finance providers like those careful borrowers. Those who make their payments on time.

When a mortgage finance lender says someone has a bad credit ratings, it’s means they may have had credit report display issues. For example; missed or late payments, CCJs, defaults, bankruptcy or debt relief orders. 

However, if you have had a few financial blips in the past, there are a few things you may look into help your chances for getting a new loan.

If investigating initially yourself 'How to get secure loan with Bad Credit' you should consider to firstly check these 5 things...

  1. Compare Credit Reports between agencies
  2. Your Credit history reports may differ from one agency to the next
  3. It may be possible to find you Can get a secure loan with bad credit even if you have some issues
  4. Check yourself how bad is your bad credit? Or maybe it is not as bad as you first thought?
  5. Access for example your Experian or Equifax credit reports
Why sign up to a Credit Reference Agency?
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How much 'Secured Loan for Bad Credit' can I get?

How much homeowner bad credit loans can I get ...or in other words 'how much equity can I borrow via my home'? This will initially also depend on the amount of equity value that you have built up in your property.

This equity value is the percentage % of your property owned outright by you = the value of the property less any initial mortgage finances you already owe on it.

For example, if your house is worth £475,000 and your main mortgage is £250,000 then you have £225,000 as a secured loans bad credit calculator.

Any further new homeowner loans bad credit finance will be measured by this £225,000 equity example, you have in your property as security against bad credit homeowner loans uk only.

In the 2020's, with fluctuating UK property prices any homeowner loan bad credit history is made harder as some lenders become more risk averse.

What are the best loans for bad credit uk will also vary between lenders. Unsure then, Please contact us about 'Secured Loans Bad Credit' enquiry >

To proceed with best secured loans for bad credit uk deal our whole of market mortgage brokers will need to know...

  • Purpose of your Secured Loan
  • Amounts Borrowed & Term
  • Personal Financial details
  • Bad Credit History files
  • Income & Outgoings
  • Employment status | Employed or Self Employed
  • Property Loan to Equity (LTV)

Plus to get secured loans for with bad credit they will require proof of

  • Property ownership eg; recent mortgage statements
  • Identity eg; passport or driving licence
  • Income eg; bank statements, wage slips or tax returns
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Property Valuations & Secured Loans

One way to initially establish how much you can borrow against your house, is by getting an indication up to date valuation of your property.

There are many free online valuations like Property Checker, Zoopla, or Yopa. But these websites can often vastly vary in their approximate valuations by £100,000+ from their lowest to highest estimates.

Alternatively, your local estate agents or a valuer may kindly advise for free as a rough guide, how much your property is currently worth. 

Also what these will not do, is raise any issues if you may have additional problems eg; rising damp or subsidence. Only an onsite inspection may establish if this could be a problem.

The amount of people are allowed to borrow are usually from £3,000 upwards often to over £1 million+. This may vary for home secured loans with bad credit.

Note: All deals are subject to the lenders individual criteria & valuation. These could be done via a full property valuation, online assessment or a drive by valuation.

Often the higher equity you have in your home, then the better your chances are of being accepted even with bad credit & with appropriate interest rates.

However, around 75% of the equity in your property in the 2020's is a fair average for lending ie; as mentioned with some uk home values falling.

So in other words, you can usually borrow less via secured loans, than via your main home mortgage.

The reason being risk wise as mentioned, your lender here now has a secondary priority risk in line to receive funds and to make any credit claims. Should you unfortunately default, then they have the added complications in the event of a repossession.

As whole market brokers we deal with many leading lenders offering competitive homeowner loans with bad credit history.

Some lenders may also allow a 3rd legal charge, should you ever require even more additional funding on top, although this is quite rare nowadays.

Uncertain then, Please contact us about 'Secured Loan Bad Credit' enquiry >

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'Bad Credit Loans UK' vs Remortgage

Due to rising UK interest rates in the 2020's, the pandemic and the cost of living crisis, more people are looking online into whether to consider a 'Bad Credit Loan UK' vs Remortgage.

It is best to fully understand some of the key differences re your options & before you make such a large financial decision.

A remortgage is when you switch & move your current mortgage across to another lender or other product. This usually does not involve you selling up & then having to moving home.

However, it will mean you having to re-negotiate or replace your main mortgage on your property with another.

Remortgaging is often not free & for some people it can come at a cost. When you remortgage, you could have to pay early exit redemption fees & then possibly a new remortgage setup admin charges.

Thereafter the new remortgage provider will also likely charge their own legal & survey costs, so it is important to calculate whether these savings can make it worthwhile switching.

Note: Some mainstream mortgage providers, may only remortgage or lend to their existing customers. These deals also may not necessarily offer the cheapest interest rates against the market but perhaps you don't want to shop around?

Should you not wish to remortgage, as you believe it is not in your interests, then you could be better off using a specialist bad credit loan secured lender, particularly if your situation is slightly more complex eg; bad credit since taken out your original mortgage.

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Further Loan Advance vs UK Loans with Bad Credit

A further mortgage loan advance is similar to getting a secured loan ie; you take out further secured borrowing and that is in additional to your main mortgage.

You maybe able to combine a further advance to borrow additional money and then product transfer switch across to a new rate on existing borrowing in one single application, if it makes financial sense.

Some lenders will not permit Further Loan advances within 6 months of completion of the original home mortgage.

Usually if your existing mortgage is in arrears anyway and you have bad credit, then perhaps your lenders may also not accept a further advance application.

Further advances are often not accepted on shared equity property schemes. If the further advance is above say 80% LTV, often a property revaluation can be required with associated revaluation fees.

Unlike for secured loans, you will be probably dealing with your existing lender. However, let's now examine some of the reasons why people would look into either options.

Note; not all main stream mortgage providers also may offer bad credit secured loans for homeowners - as it is a niche marketplace. You may not have heard of some of these providers, as we have access to the whole of market.

Often people remortgage or take a further advance releasing money from a house because...

  • Need more money
  • Home Improvements
  • Current deal is ending
  • After better interest rates
  • Need a flexible mortgage
  • Concerned over interest rates rising
  • Switch from interest-only to repayment basis
  • You now wish to over-pay & your lender won't let you

So our finance brokers can check how much you can borrow against your home. They are familiar with the market can save you both the time, stress & cost of wasted paperwork. Please contact us about Homeowner Loans Bad Credit UK enquiry >

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Top 10 Reasons for a 'Bad Credit Loan Secured'?

So given the above options, let us now look at various Top 10 reasons why secured 'uk loans with bad credit' could be another option (rather than just remortgaging).

  1. Bad Credit status occurred since you originally took main domestic mortgage
  2. Main mortgage is set up on interest-only & you do not want to re-mortgage over to repayment
  3. Unable to get an un-secured personal loan due to bad credit status, amount required or term
  4. Wish to borrow beyond your normal retirement ages & they won't allow that
  5. Need a longer loan term for 10 years+ period to make regular payments more affordable
  6. Locked into a long term main mortgage low fixed rate deal & this makes no sense to cancel
  7. High early exit penalty fees are applied by your main mortgage lender
  8. Main mortgage lender won't allow you to borrow anymore based on income multiple or business accounts
  9. Need to consolidate existing un-secured credit that a remortgage lender may not allow
  10. Trapped with mortgage lender & now unable to switch as you don't pass their current strict affordability tests

Note: These above examples will all depend on your circumstances & so are not to be considered personal advice. Note: secured 'loans for bad credit in the uk' interest rates maybe higher than on your main mortgage.

Remember, if you are looking to raise finance, always consider firstly either re-approaching your existing lender or ask them about an un-secured personal loan as alternative finance options.

If this doesn't work for you, then our brokers would be happy to help instead for your secured loan. Please contact us about Secured 'Loans for Bad Credit in UK' >

Can you Refinance your 'Loan with Bad Credit UK' deal ?

Yes, it is possible to refinance your secured loan deal to another. For example, if your credit has now improved since you took out the loan & you have found any better finance rates or deals.

However, you may find it harder than say remortgaging your main mortgage, due to the UK lenders additional risk.

But provided you have made regular secured loans against your home payments, your credit profile is still okay or better, and your income & outgoings show your finances are well managed, then it is worth reviewing.

Conversely, if your main mortgage terms are now worth remortgaging eg; a good fixed rate deal has ended, you could now review & combine both the main mortgage & any 'loan with bad credit uk' secured.

What happens if you want to move home?

If you want to sell your home, you will need to pay off any secured finance, as well as your main mortgage.

Sometimes, your lender may allow you transfer your secured loan deal across to a new property.

Pros & Cons of a Secured Loan for Bad Credit in UK

* Pros

  • Access the value in your home to borrow larger amounts of money
  • Raise funds on a secured basis - if unable to do so unsecured
  • Lower interest rates on larger sums borrowed than personal loan

* Cons

  • Your home is at risk if you cannot make the secured loan repayments
  • Take on more debts than you can afford payments on
  • You borrow more than you need & so reduce homes' loan to value

Note: Money Saving Expert Martin Lewis on Secured Loans is not really a big fan...but does appreciate that they do have their place for some people.

Martin Lewis says they should be considered only as a last resort .....maybe only to consolidate debts re say bad credit & only if it means overall you are hopefully paying less on your outgoings.

As secured loan brokers we would say that remember, you are perhaps not clearing your loans & credit cards, just re-organizing them to hopefully ensure that they are then fully cleared in the future.

Please contact us about you 'Securing a Loan with Bad Credit' enquiry >

Life Insurance on 'Securing a Loan with Bad Credit'

Whilst either looking to raise money or consolidating outgoings, it is easy to forget (especially if this a joint 'loan secured against property' deal) that you should also consider insuring any extra loans secured on house.

You probably may have some protection in place on your main mortgage? However, people often then forget about reconsidering more protection insurance for your loans, credit cards & Home Loans.

For example, it could be any new 'loans secured on home' term is now longer or maybe now set up in joint names, so maybe your existing mortgage protection insurance cover policy is now inappropriate?

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Do you need Loan Insurance Protection?

This is a valid question...If 2 people are taking out any a new joint secured loan for bad credit in uk (whether married or in a couple) and those 2 people are also named on the joint secured loan house deed?

Then your secured loans lender can potentially go after either one of you, for the full repayment of that joint loan if there are any problems.

This means if one of you sadly died, or is critically ill, then the other person could be left with the full loan repayment on the house. If this happens to the main family breadwinner, the situation could be even worse.

The surviving partner can now be legally pursued by the lender for future ongoing secured loan repayments. At your worst time, the situation could get even worse unhappy face

Considering taking out secured property loans or remortgaging & now wondering...Do you need Life Insurance for secured 'loans with bad credit uk' protection?

Then, please consider these reasons for Your 3 x Maybe....

Mortgage Protection Life Insurance - Maybe Your 3 x 'Maybe'

  • YOUR HOME ‘Maybe’ your biggest asset
  • YOUR HOME LOAN ‘Maybe’ your biggest debt
  • YOUR HOME ‘Maybe’ repossessed if you do not keep up repayments on your property secured loan
protection insurance for loan bad credit secured

Family Life Insurance & Secured Loan Insurance?

When looking at protection insurance for your secured 'loans on bad credit uk' property, also look at the wider picture of what may happen if the worst sadly happens. People often forget about this bigger picture & so just concentrate solely on covering just their secured loans with protection insurance.

Although that particular life policy has potentially protected the home you own & maybe now paid out, you may still need to have ongoing income to pay your regular bills. If not, and say the main breadwinner had died, would you now have to sadly sell up & move after taking out a secured loan ?

  • Your secured loan payment are only just part of your regular monthly outgoings
  • Other ongoing usual expenses include Gas, Electric, Food, Travel, Credit cards, Mobile, Utilities etc;
  • Regular monthly bills will not stop coming in if sadly someone dies
  • Likewise you would also still have to cover funeral costs and maybe repay other outgoings
  • It makes sense to have both Life Cover for loans & Family Life Insurance if you have dependants (young or old)

Bad Credit Loan Secured = Decreasing Term Policy?

  • Decreasing Protection cover is meant to help insure 'repayment style' loans
  • Secured loans usually reduce over their term if you keep up your repayments
  • A decreasing term insurance policy will also therefore reduce over its term or time period
  • The plan payments however stay the same throughout the average cost life insurance policy
  • Decreasing Term Insurance loan rate flexible for 'loans with bad credit low apr' terms
  • Cover is ‘underwritten’ so Insurers ask you medical lifestyle questions before offering a deal
Chances of making a insurance claim | Uk Life Insurance Quotes > 15 secs
Chances of claim re a Secured Loan bad credit or not

Why is Critical Illness Cover* more expensive?

  • People often like the option of including critical illness cover with their loan protection insurance
  • Critical Illness* covers a large number of risks [could be 50/100+ benefits] to help repay a secured loan
  • Statistically you are far more likely to be making a claim on critical illness insurance, if included than just lifecover
  • For example, 50% of people will be diagnosed with a form of cancer in their lifetime [Cancer Research UK]
  • It pays out on survival & recovery via specified benefit types eg; cancer, heart disease, stroke, multiple sclerosis etc;
  • Note:Terminal illness benefit is often included 'free' as part of a Life insurance Policy
  • Terminal Illness however on an insurance policy means you have sadly less than 12 months to live ie; won't survive
  • Do not confuse these 2 loan protection benefits if looking to get a 'secured loan with bad credit'

Mortgage Payment Protection (MPPI) for Loan Protection?

  • MPPI covers your secured loan payments against accident, sickness & hospitalisation
  • Designed to cover secured loan payments for these benefits but not life insurance for death
  • A short term cover plan & usually paid for upto 12 months. May also cover unemployment & some bills
  • Some new Insurers may not offer unemployment part of policy due to the Coronavirus pandemic
  • MPPI Loan Protection Payment is the same as PPI. However, the codes for this product sale have tightened
  • Various risks, pre-existing issues or employment problems may well have initial exclusions after policy starts
  • Not medically underwritten [unlike PHI Income Protection] meaning cover is offered with no medical tests or GP reports

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UK 'Loans with Bad Credit' & Income Protection?

  • Designed to pay out Tax Free Income longer term to help mortgage and loan payments & ongoing bills
  • Usually PHI has an initial waiting or deferred / waiting period from 1/4/8/13/26/52 weeks 
  • Plans on a claim can usually run the term of the secured bad credit loan or upto age 70
  • Medical evidence is usually required for underwritten PHI insurance before any terms offered
  • Insurers calculator for home equity loans may be based on loan amount borrowed only
  • Or a maximum of say upto 70% of your pre-tax gross annual earnings

Conclusion on 'Loans for Bad Credit Secured'

Having read this review and decided 'securing a loan with bad credit' may be your financial solution? You have considered their various pros & cons we raised.

So, whether you wish to go direct, having read this guidance & not shop around for what are the best loans for bad credit uk deals? Or instead, prefer to speak to a professional broker about this. You pay’s your money & takes your choice. 

As secured loan brokers, our Finance Brokerage are FCA regulated, so are well placed to help you out.

Whatever your credit status, bad or good…please contact us for help re your ideal financial solutions. Note, since the pandemic many financial advice services have now changed. 

Face to face is where advice is delivered by a qualified broker, who will travel to a customer’s home or other location of choice. There, they will discuss your needs allowing any family members to be present & involved in the decision making process & answer questions.

Telephone advice is where the advice is provided primarily over the telephone or on zoom by a qualified brokers who deal with all types of secured loan with bad credit. This is then supported by an appropriate call centre for the purpose, with call recording, data storage and appropriate monitoring procedures in place.

Looking for sound advice & chatting with a suitably qualified FCA regulated broker about a bad credit loan secured deal?

Please contact us about you 'Securing a Loan with Bad Credit' enquiry >

Article on ‘Loans for Bad Credit Secured’ review by Martyn Spencer Financial Adviser (2024)

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