Secured loans in the UK

In the UK, secured loans, which are often referred to as homeowner loans, require you to offer the lender security against the loan, so they are able to balance the risk of lending to you. With the vast majority of secured loans, this will be your property.

Secured loans are available in the UK through the following options:

• high street banks & building societies: a few traditional banks and building services also offer secured loans. However the majority only offer personal loans
• specialist loan providers: specialist loan providers only deal with loans and some only offer secured loans. There are also specialist loan providers who cater specifically for customers who have experienced credit problems
• brokers: brokers do not offer loans directly, but act as an intermediary between a number of lenders who they work with and customers looking for a loan. Some loan providers only work with brokers

In the UK, brokers are not tied to specific lenders, but work with a panel of UK lenders so they can match the customer’s needs to a wider choice of secured loans. If a borrower successfully completes a secured loan application through them, they are paid a fee or commission by the lender.

The benefits to borrowers in using a loan broker are:

• they can secure the lowest interest rates for borrowers
• borrowers only need to give their details once. The broker will then use these to get the best possible deal from all the lenders they work with
• using a loan broker will guarantee a quick response to a loan enquiry

As a secured (homeowner) loan uses your property as security against the loan, you need to be very sure you can maintain regular re-payments. If you default on the loan, the lender will be eligible to claim your property as payment for the outstanding balance owed. Not only will you lose your home, but you will have damaged your credit rating, affecting any future borrowing.