What a secured loan is — and when it's best
A secured (or "homeowner") loan is borrowing secured against your property, separate from your mortgage. Because the lender has security, you can usually borrow more, over a longer term, at a lower rate than an unsecured loan — but your home is at risk if you don't keep up payments. The best secured loan is the one that meets your need at the lowest true cost, used only when the borrowing genuinely justifies the risk.
1. Secured loans for debt consolidation
Rolling expensive debts into one lower-rate secured loan can cut monthly payments. Best for homeowners with larger debts who can't get a big enough unsecured loan — but stretching debt over a long term can cost more interest overall, and you're converting unsecured debt into debt against your home.
2. Secured loans for home improvements
For major work — extensions, conversions — a secured loan funds larger budgets affordably. Best when the project is too big for an unsecured loan and you'd rather not remortgage (e.g. you have a good mortgage rate you don't want to disturb).
3. Secured loans to avoid remortgaging
If your current mortgage has a low fixed rate or early repayment charges, a secured second-charge loan lets you borrow extra without touching the mortgage. Best for homeowners locked into a good mortgage deal who need additional funds.
4. Secured loans for larger sums or adverse credit
Secured lending can reach higher amounts than unsecured, and the security means some lenders accept adverse credit more readily. Best for homeowners needing a large sum or with credit issues — at a better rate than unsecured bad-credit borrowing.
The risks to weigh
- Your home is at risk if you can't keep up repayments
- Longer terms cost more interest even at a lower rate
- You're securing previously unsecured debt against your property
- Always compare against unsecured loans and remortgaging first
How to find the best secured loan
Secured loan rates and criteria vary widely, and the best deals aren't on comparison sites. A whole-of-market broker can compare secured options against unsecured and remortgage routes to find the lowest true cost. Find a secured loan specialist through Nesto — free, no obligation.
Frequently asked questions
How much can I borrow with a secured loan?
It depends on your equity, income and credit — secured loans can reach much larger sums than unsecured, often from £10,000 to £100,000+.
Are secured loans cheaper than unsecured?
The rate is usually lower because of the security, but a longer term can mean more total interest. Compare the full cost, not just the rate.
Can I get a secured loan with bad credit?
Yes — the security makes lenders more flexible on credit history, though rates are higher than for clean credit.
What's the difference between a secured loan and remortgaging?
A secured loan sits alongside your mortgage (second charge); remortgaging replaces your mortgage. A secured loan avoids disturbing a good mortgage rate or paying early repayment charges.
What happens if I can't repay a secured loan?
The lender can ultimately seek repossession of your home. Always be confident you can afford the payments, and seek free debt advice if you're struggling.