A secured loan might be right for you if:
- you are OK using an asset, like a home, as security.
- you have a low credit score or poor credit history.
- you want to borrow more money for up to 40 years.
- you're confident you can pay it back on time.
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Secured loans explained
A secured loan could help you borrow more money, for longer. That's because you put up security – like your home.
This asset could be taken if you don't pay your loan back.
How do secured loans work?
When you apply for a secured loan, you will be asked to volunteer a personal asset as security – usually your house. This means your loan becomes tied to that asset.
Like any loan, you should be sure that you’re able to make the repayments in full and on time before you agree to it. If you fail to keep up with your repayments, your lenders can seize your asset to get some of their money back.
If you are struggling to make payments, then read our struggling financially guide section.
How does an unsecured loan work?
Unsecured loans aren’t tied to any personal assets. Instead, unsecured loan eligibility is based on the lender’s evaluation of your credit score.
Because this type of lending tends to be riskier for banks, you often need to have a good credit history to be accepted. Learn more about credit scoring.
If you don’t meet the credit requirements, some lenders may still approve a loan if you have a co-signer. A financial health check will help review your finances and provide tips to improve your credit score.
What happens if you fail to repay?
If you fail to repay an unsecured loan, your lender may pass your account to a solicitor to start litigation. The solicitor will look to agree a suitable repayment programme with you, if this is not possible they will apply to the courts for a judgment and charging order over the property you own.
You'll need to pay all loans back
If your loan is secured, your asset (like your home) is at risk. If you don't pay an unsecured loan back, your asset could be safe. But you could be taken to court and your debt passed to debt collectors.
To apply for borrowing, you must be 18+ and living in the UK. Subject to lending criteria.