Secured loan advice

With our extensive experience here at Just Mortgage Brokers, we endeavour to offer you the best solution in finding the secured loan that is right for you.

Whether you’re looking to renovate a property, complete a project, or place a deposit to add to your property portfolio, secured loans are available for so many different reasons.

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Author: Carl Shave - CEO and co-founder
Last updated: 14 Jul 2024

Can I get a secured loan?

Obtaining a secured loan is very similar to applying for a standard mortgage, albeit the lender’s criteria may differ slightly. You will of course, need to own a home that will be used as security on the loan.

The availability is also invariably via specialist secured loan lenders, as most main mortgage providers are not in this market. The finance can also sometimes be referred to as a second charge mortgage due to the security sitting next in line behind your main mortgage loan.

However, do note that your legal obligations to ensure the loan payments are maintained are the same as for your main mortgage. This means a lender can still repossess your property if their payments are not kept up to date.

An introduction to secured loans

Secured loans topics

Useful Information

Secured loan lenders

Secured loans are fairly widespread in their availability. However, you’ll typically find that lenders offering these loans will be specific providers in the sector.

This however, does not mean your lending is any more at risk, nor that you will be treated in any different way. These specialist lenders are still regulated by the Financial Conduct Authority (FCA) and must abide by the same regulatory rules as typical providers.

It is also worthwhile pointing out that your obligations will also remain the same. This means your home or investment property being used as security are still at risk and can be repossessed should you not maintain your monthly payments.

Interest rates on secured loans

A secured loan is in many ways the same as a mortgage, aside of the fact that the provider is registering the loan as a second charge behind the main mortgage provider’s loan. This is why this type of lending is also sometimes referred to as a second charge loan.

The fact that the loan is being registered second in line, will invariably mean that the rate will be higher than that offered by a main mortgage provider.

However, this sector of the market has become more popular and the increase in availability has in turn driven competition. Therefore, there are better rates to be found every year.

As these loans are treated in the same manner as a standard mortgage you will still get the choices of the same products. You can expect to see product types like fixed rate, discounted or tracker variable rates.

Again, as with the main mortgage market, influencing factors will determine which rates are available to you. This includes the type of loan i.e. residential or Buy-to-Let, the loan to value (LTV) i.e. the more you wish to borrow against the value of your home the higher the rate will typically be. Your credit history will also be considered and therefore you can expect those with a good credit rating to be offered better rates.

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Secured loan mortgage brokers

Whatever you are raising funds for, Just Mortgage Brokers has a team of specialist advisors with the skills and knowledge to source the right secured loan for you.

You’ll be allocated your own dedicated advisor who will guide you through the entire application process.
We’re confident you’ll be delighted with the individual service you receive, as we endeavour to find you the most suitable secured loan, tailored to your specific needs.

For the right-secured loans on and off the high street, look no further than Just Mortgage Brokers.

Buy-to-Let secured loans

Buy-to-Let market changes have affected mortgage criteria, leading to an increase in secured loans and improved borrowing opportunities for many individuals.

As a secured loan is still a form of finance using the property as security, the main criteria remains constant in that the rentable value of the property will determine the level of borrowing permitted. This is commonly referred to as the Interest Coverage Ratio or ICR.

Some secured loan providers are happy to also take an applicant’s personal income into consideration. This can sometimes enable a higher loan amount to be achieved.

Lenders are generally more flexible when it comes to the number of Buy-to-Let properties a borrower can have. This can be especially useful for portfolio customers and those looking to build the number of Buy-to-Lets they own.

Although not common practice by all secured loan providers, there are some that will consider finance for properties that are not initially in a rentable condition. These properties would not usually qualify for a standard Buy-to-Let loan at the outset.

Bridge to let finance could hold the key for these clients. This is where bridging finance is offered initially and then converted to a Buy-to-Let mortgage once the property has been completed.

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What is the criteria for a secured loan?

Criteria for a secured loan is very similar to that of a standard mortgage. Also, as with standard mortgage providers, each will have its own individual set of rules as to how they assess your application.

There are perhaps some broad differences that apply to most, such as:

  • Affordability:  Secured loan companies can, on occasion, offer slightly increased levels of loan sizes compared to main mortgage providers. This is due to the more flexible approach of how they assess your ability to afford the loan. They are however still regulated by the FCA and have to apply a level of sensibility in their assessment.
  • Purpose of the loan: Main mortgage providers will be very specific about what the reasons are for any loans being applied for i.e. rarely will they permit for speculative or business purposes. Secured loan companies will consider finance for any loan purpose, including tax bills.
  • Loan-to-value: This is one area where a secured loan may have greater restrictions than a main mortgage provider. Generally speaking, the maximum loan-to-value will be 85% for residential loans and 75% for Buy-to-Let finance, although, this is not necessarily the same right across the board. So, even if you may require more than this, it is still worth enquiring.

What can secure loans be used for?

There are a range of things you can use secured loans for. From our experience, two of the most common uses for a secured loan are debt consolidation and home improvements.

If you have personal debt spread over various lines of unsecured credit, then it can sometimes make sense to consolidate it all into one.

There can be a number of benefits in using secured loans for debt consolidation. The most obvious is a matter of cost. Unsecured lending interest rates are often several times higher than secured lending rates.

It can mean the difference between paying, for example, 19.9% interest on a credit card debt, and 3.9% interest on a secured loan. Depending on the size of the debt, that can make a significant difference to the amount of interest you have to repay each month.

By lowering the amount of interest you have to pay, it can allow you to pay it off over a shorter term.

There is also a matter of convenience when combining all your debts into one. With a secured loan, you don’t have to remember to make several payments a month, instead there is just one.

Taking out a secured debt consolidation loan is an ideal solution for many people with unsecured debt. But, it’s not right in every situation, and it’s a decision that should only be taken after full consideration.

If you are looking to carry out home improvements there are a number of ways to fund the project. Home improvements can include a loft conversion, installing a new kitchen, renovating a bathroom, or building a new conservatory.

If you do need to borrow for home improvements there are a few options you can use. These options include a remortgage, to take out a further advance on an existing mortgage, or to get a secured or unsecured loan.

Unsecured loans are not secured against a tangible asset (such as a property). This represents a higher risk to lenders in the event that the borrower defaults on the repayments. Therefore, interest rates for unsecured loans are usually notably higher than for a secured loan. Unsecured loans are also typically taken out for a shorter repayment term – normally between one and five years.

Secured loans, on the other hand, are secured by a legal charge typically against a property. That means, if you default on the loan payments, the property, can be repossessed to repay the defaulted debt. This makes secured borrowing a potentially riskier option for you, but it reduces the risk to the lender.

As a result, secured loan interest rates are generally lower than for unsecured lending. Secured loans are often repaid over a longer term – usually terms of between 5 and 25 years are available.

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