Choosing the right secured loan for you

A secured loan is a loan that requires you to put an asset up as collateral, typically, but not always your property. This means that the lender is able to balance the risk of lending to you with the knowledge that they can force the sale of your asset if you fail to repay them in full and on time. 

If you're looking for the cheapest secured loan, read on and find out all you need to know about your options in the UK.

What is a secured loan?

By taking out a secured loan, you are borrowing money that's secured against an asset or assets, usually your property. Secured loans are often cheaper than other types of loan, but you do have to think carefully before taking one on. You could lose your asset (for instance your home) if you can't keep up with the repayments.

The amount you can borrow with a secured loan differs from lender to lender and depends on your individual circumstances. The cheapest secured loans are the ones with the lowest Annual Percentage Rate (APR). The APR calculates the total cost of borrowing over a year, including the interest paid as well as fees and charges.

By using a secured loan calculator with Uswitch you can compare the cost of different types of secured loans in the UK and work out which is best for you.

Why choose a secured loan?

Secured loans – also sometimes known as homeowner loans – offer a way to borrow larger sums of money (usually £15,000 +) by using an asset such as the collateral equity in your home as security against your repayments.

To ensure you have a good chance of finding the cheapest loans available to you in the UK, we work with a loan broker to widen the secured loan possibilities available to you.

The difference between personal loans and secured loans is that the secured loan is attached to an asset, which is at risk if you default on your repayments. If you secure the loan to your property, you could lose your home.

What are unsecured loans in the UK?

Unsecured loans are also known as personal loans. They're not attached to any asset, including your home. For this reason, they could be considered as higher risk for lenders as there is no collateral for lenders to claim if you are unable to repay them.

For this reason you will need to have a good credit rating based on your personal financial circumstances, to offer reassurance to lenders of your ability to pay back the loan. You’ll typically also pay a higher interest rate than with a secured loan.

Secured loans comparison - how to find the best secured loans UK

Use our secured loans calculator to find a cheap secured loan. We will then refer you to a loan broker that we have vetted. Before searching for the cheap secured loans, you need to be honest about your loan requirements. For instance:

• Whether you will take a secured loan from a lender you have not heard of.

• How much you can afford to borrow and pay back.

• Whether you might want the option to pay back your loan early. 

Homeowner loans can also be useful for property owners with a poor credit rating as the risk the bank is taking is minimised.  Shopping around and comparing secured homeowner loans means you are more likely to find the best deal for you.

The amount that can be borrowed, the term available and the Annual Percentage Rate (APR) you’re offered will depend on:

• the value of your property

• your ability to repay the loan

• your personal circumstances and credit rating

You need to think very carefully about how you manage a secured loan. If you default on a loan secured against your property, you risk losing your home.

How to get the best deals on the cheapest secured loan UK

It can be hard to compare secured loans independently, as some providers only work with loan brokers and aren't available directly to the general public.

We work directly with suppliers and trusted brokers to ensure that you can compare the widest selection of loans available.

By working only with reputable brokers and direct loan providers we aim to protect you from the pitfalls of borrowing from the wrong type of provider.

Cheap secured loans for people with bad credit

Secured or homeowner loans can offer the opportunity to borrow money for customers who have experienced money issues in the past and have damaged their credit history as a result.

A secured homeowner loan can be a good option because:

• you are more likely to be accepted for a secured loan than a personal loan

• the interest is likely to be more competitive than personal loans which are available to customers with adverse credit

• the repayment term can be longer

These loans work because the provider has the security of your property to fall back on if you default on your payment.

A secured loan needs a lot of careful thought to ensure you're 100% confident you can meet the monthly payments over a number of years, and will not find yourself in a situation where you could lose your home.

Why should I choose a secured loan?

Secured loans allow you to borrow more and repay over a longer period than a personal loan – up to 35 years. They can normally be used for almost any purpose and, as the lender has the benefit of security, they can be offered to people who may be excluded from other loans. 

Borrowers who are self-employed, have recently changed jobs or have previous credit problems will be considered for a secured loan. They are also useful for borrowing larger sums or where the applicant requires a longer repayment period.

How can I find the best secured loan?

Finding the best secured loan for your situation can be complicated as there are many factors for the lender to take into account. Uswitch.com can do all the work for you with our secured loans comparison service.

All you need to do is tell us a few details about the secured loan you are looking for and your personal circumstances. It is free, impartial and any information you give us will remain confidential and secure.

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