What's a secured loan?

How secured loans work

Secured loans are secured on your home and can be used for a variety of things – like improving your property, or consolidating debt.

Key facts about secured loans

  • These loans are also called secured homeowner loans
  • With secured loans, if you default on the payment, you could be made to sell your home to clear your debt
  • Lenders will look at the value of your home, as well as your personal credit history when deciding whether to offer you a secured loan
  • Rates for secured loans tend to be lower than for unsecured loans, but there could be extra fees – and of course your home could be at risk
  • People who don’t have a good credit history, but do have value in their home, may apply for a secured homeowner loan
  • Why are they called secure? Loans are secured against the value in your property, so are secure in respect to the lender. There is no special 'secure feature' from your perspective
  • An alternative to taking a secured loan is to increase the mortgage on your property

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.