Loans Secured against Property | UK Broker Deals
UK Loan Secured by Home > Up to £1 million+ > Up to 35 years*
What is a ‘Loan Secured by Property’?
So, what are ‘secured loans against property’ or a loan secured by home? They are loans secured against house 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.
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’? The pros & cons associated with taking one out. Then, some other alternative options to maybe consider.
‘Secured loans for homeowners’ are 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 ‘secured loan for homeowners’ broker deal, you may be able to borrow larger sum of money with a longer repayment term, than perhaps other types of unsecured finance.
The nature of a house secured loan is that it is legally secured to assets that you may own ie; usually your residential property or other substantial assets you may own.
Many secured loan house lenders uk terms in the 2020’s may also offer lower interest rates than unsecured loans & for larger amounts.
The reason behind this is because those ‘loan secured by house’ 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.
- Secured Loan against Home deals can be used for most purposes…
- Consolidation, Home Improvements, School Fees, Holidays or Business use
- 2nd Home for Holiday or Family
- Available generally on longer term basis than unsecured loans e.g. 25 years+
- Or on a shorter term ‘bridge’ basis of up to 12/18 months
Note: Making regular repayments upon time to any loans secured by home finance via your lender is crucial to maintaining your credit status in the longer term
Can I get a ‘Loan secured against Property’?
Your ability to get any loans secured against property will depend (apart from your actual home equity values), on you being able to show a good financial track record at paying off your main first mortgage ie; are you a good finance risk?
Who can get a secured loan deal? Those who are ideally up to date with their regular monthly mortgage & bill repayments. Also, these regular bills should be paid on time. If you have some bad credit, then we may still be able to help you out (but usually at different interest risk terms).
For secured loans for homeowners, lenders must also comply with FCA responsible lending & financing rules (that also cover your main home mortgage).
This means therefore for home secured loan providers, they should 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 secured loan for homeowners lending must also stress test your ability to meet future payments. However despite much debate, these rules re loans secured on house were maybe set to change.
- Using any loans secured by property also means you can have more than loan on a property uk at anytime
- Any secured loan against home means for some Lenders they will take your existing mortgage repayments plus other property related costs into account, for their affordability calculations
- Your ability to get say secured loans for home improvement will depend on (amongst other things) your likelihood to be able to meet both first & second charge payments
Loan Secured on House
How much ‘Loan Secured on Home’ can I get?
Some people may then ask, How much Loan secured by Home can I get …or in other words ‘how much can I borrow against my home’.
Well, 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 home less any initial mortgage finance you already owe on it.
For example, if your property is worth £265,000 and your main mortgage is £165,000 then you have potentially £100,000 available toward a home secured loan.
Any further secured finance will be measured by this £100,000 equity example, you have in your property as security against a secured loan on house uk based.
In the 2020’s, with fluctuating UK property prices trying to borrow say for home improvement secured loans is made harder as some lenders become more risk averse.
Any loans secured against house amounts will also vary between those home secured loan lenders. Unsure then, Please contact us about ‘Secured Loans for Homeowners’ >
To proceed with any best ‘home secured loans’ deal our whole of market uk mortgage brokers will need to know…
- Purpose of your ‘loan secured against property’
- Amounts Borrowed & Term
- Personal Financial details
- Credit History files
- Income & Outgoings
- Employment status | Employed or Self Employed
- Property Loan to Equity Value (LTV)
Plus Proof of
- Property ownership eg; Mortgage statement
- Identity eg; passport or driving licence
- Income eg; bank statements, wage slips or tax returns
‘Loan secured against House’ Valuation?
The best way to establish how much ‘loan secured on house’ you can get, is by getting an indicated up to date valuation of your property.
There are many free online valuations like; Zoopla, Yopa or Onthemarket. But these websites can often vastly vary in their approximate property valuations by £100,000+ from their lowest to highest estimates.
Alternatively, your local estate agents or valuer may kindly advise for free as a rough property guide, how much your house is currently worth.
Also what these will not do, is also raise any issues if you may have specific property problems eg; rising damp or subsidence. Only an actual onsite inspection may establish if this could be a problem.
Can I get a secured loan on my property may vary in amounts, but typically a ‘loan secured by property’ is available usually from £3,000 upwards often to over £1 million+.
Often larger sums are available for bridging finance. Note: All loans secured against house 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 value (LTV) you have in your property, then the better your chances are of being accepted & with lower 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 property values falling.
Some lenders may help clients (who are looking for smaller secured property loans upto £10k) borrow above this average LTV.
So in other words, generally you can usually borrow a little less with a ‘loan secured on property’, than via your main home mortgage ie; how does a secured loan affect your mortgage.
The reason being risk wise, your lender here now has a secondary priority risk in line to receive funds and to then make any credit claims. Should you unfortunately default, they have the added complications in the event of a property repossession.
As whole market brokers we deal with many leading lenders offering competitive ‘Home Secured Loans’.
Some ‘loans secured on property’ lenders may also allow a third legal charge, should you ever require even more additional funding on top, although this is quite rare nowadays.
‘Loans secured on Property’ vs Remortgage
It seems that due to rising UK interest rates in the 2020’s and the ongoing cost of living crisis, more people are looking online into whether to consider a secured loan on a Property vs a Remortgage.
It is best to fully understand some of the key differences re your options & before you decide to make such a large financial decision.
A remortgage is when you switch and move your current mortgage across to another lender or other product. This usually does not involve you selling up & having to moving home.
However, it will mean you having to re-negotiate the deal 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 off any 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 and fees, so it is important to calculate whether these savings can make it worthwhile switching.
Note: Some mainstream home mortgage providers, may only remortgage or only 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 ‘loan secured by property’ lender, particularly if your situation is slightly more complex eg; adverse credit since taken out your original mortgage.
Further Loan Advance vs ‘Secured Loan on a Property’
A further mortgage advance is similar to getting a loan secured by property ie; you will take additional borrowing secured against your property 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 a Further Loan advance within 6 months of completion of the original home mortgage. Usually if your existing mortgage is in arrears, then your lenders may also not accept a further advance application, so releasing equity from a house.
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 loans secured by home, 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 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 equity from a house in order to…
- Borrow more money
- Current deal is ending
- Want better interest rates
- Need more flexible mortgage
- Concerned about interest rates rising
- Switch from interest-only over to repayment
- You now wish to over-pay & your lender won’t let you
So our finance brokers can check how much equity can be released from a property. They are familiar with the market can save you both the time, stress & cost of wasted paperwork. Please contact us about ‘Secured Loans for Homeowners’ >
Top 10 Reasons for ‘Home Secured Loans’…
So given the above options, let us now look at various Top 10 reasons why ‘secured loans against house’ could be another option (rather than just remortgaging).
- Main mortgage is on interest-only & you do not want to re-mortgage over to repayment
- Unable to get an un-secured personal loan due to credit status, amount required or term
- Wish to borrow beyond your normal retirement ages & they won’t allow that
- Need a longer loan term for 10 years+ period to make regular payments more affordable
- Locked into a long term main mortgage low fixed rate deal & this makes no sense to cancel
- High early exit penalty fees are applied by your main mortgage lender
- Main mortgage lender won’t allow you to borrow anymore based on income multiple or business accounts
- Credit status has changed for the worse since you originally took main domestic mortgage
- Need to consolidate existing un-secured credit that a remortgage lender may not allow
- 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 against home 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 against home. Please contact us about a ‘Secured Loan for Homeowners’ >
Secured Property Loan Brokers
Our secured property loans brokers will work to try and secure you the best ‘secured loan against property’ & terms. They will negotiate with those providers on your behalf and get you access to some broker exclusive deals.
Don’t forget this means you would be now in effect taking out 2 mortgages. Technically therefore, you are twice financially liable for your repayments against the security of your own property bricks & mortar.
So your first charge would usually be your mortgage ie; 1st priority payments charged ahead of the 2nd charge property secured loans payment.
You will also need to get written legal permission from your existing mortgage lender ie; give their ‘legal consent to a 2nd charge’ before you can apply.
This consent should ideally be done as early as possible in the process, as some providers may be more willing than others to give their consent.
Some lenders administration can be a little slow to access the necessary documentation. Finally, as mentioned your new ‘property secured loan’ finance provider may also wish to obtain a valuation on your property.
Can you Remortgage your ‘Loans secured against Home’ deal ?
Yes, it is possible to remortgage your house secured loan deal to another. For example, if 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, 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 loans secured on property uk based.
What happens if you want to move property?
If you want to sell your property, you will need to pay off any secured property loans, as well as your main mortgage.
Sometimes, your lender may allow you transfer your secured loan house deal across to a new property.
Pros & Cons of a ‘Loan Secured on Property’
- Access the equity 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
- Your home is at risk if you cannot make the loan repayments
- Take on more debt than you can afford payments on
- You borrow more than you need & reduce home 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 all 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 >
‘Loans Secured on Property’ Life Insurance
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?
Do you need Insurance for ‘Secured Loans’?
This is a valid question if 2 people now take out any new joint ‘homeowner secured loans’ (whether married or in a couple) and those 2 people are also named on the joint secured loan on house uk deed?
This means if one of you sadly died, or is critically ill, then the other person could be left with the full loan repayment after releasing equity from a 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 ‘property secured loan’ repayments. At your worst time, the situation could get even worse
Considering taking out secured property loans or remortgaging & now wondering…Do you need Life Insurance for your ‘property secured loans’ protection?
Then, please consider these reasons for Your 3 x 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
Family Life Insurance & Loan Protection Insurance?
When looking at protection insurance for your home secured loan, 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 insurance.
Although that particular life policy has potentially protected the property 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 after taking out a secured loan with home as collateral?
- Your home secured loans 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 Insurance for home loans & Family Life Insurance if you have dependants (young or old)
Secured Loan Insurance = Decreasing Term Insurance?
- This Loan Protection is designed to help insure a ‘repayment style’ property loan or other secured debts
- Secured loans against your home amount you owe will then reduce over the 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 calculator for home loan repayment
- Cover is ‘underwritten’ so Insurers ask you medical lifestyle questions before offering terms
Why is Critical Illness Insurance* more expensive?
- People often like the option of including critical illness cover with their secured loans protection insurance
- Critical Illness* covers a large number of risks [could be 50/100+ benefits] to help repay a secured loan against property
- Statistically you are far more likely to be making a claim on critical illness cover, 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 home secured loan
Mortgage Payment Protection (MPPI) for Property Secured Loan?
- MPPI covers your secured property loan payments against accident, sickness & hospitalisation
- Designed to cover any secured loan payments 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 Insurance] meaning cover is offered with no medical tests or GP reports
Secured Loans against Property & Income Protection?
- Designed to pay out Tax Free Income longer term to help secured property 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 home secured 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 secured against Property‘
Having read this review and decided a loan secured by property 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 secured loan for homeowners deals? Or instead, prefer to speak to a professional broker about this. You pay’s your money & takes your choice.