Secured loan vs remortgage to pay off debt: which is better?

How do a secured loan and a remortgage differ?

Both routes use the equity in your home to repay unsecured debts, and both put your home at risk if you do not keep up the payments. The difference is what happens to your mortgage.

A secured loan is a separate agreement with a second lender. It is registered at the Land Registry as a second charge behind your mortgage, which stays exactly as it is: same lender, same rate, same term. You end up with two monthly payments, and the loan usually runs for a shorter term than the mortgage. Because a second charge lender is only repaid after the first if the property is sold, its rate is normally higher. FLA data shows 44,725 new second charge agreements worth £2.4bn in the 12 months to June 2026, with loan consolidation at least 60% of new business, so this is a well trodden path.

A remortgage replaces your mortgage with a new, larger one. The extra borrowing is released on completion and you use it to clear the debts. You keep one payment at a mortgage rate, but the whole balance moves to whatever rate is available now, and the consolidated debt runs for the full mortgage term unless you shorten it. Our guide to what a second charge mortgage is and our remortgage to pay off debt hub explain each route in more depth.

What do the two routes cost on the same £20,000?

The cleanest way to compare is to run identical debts through both. The example below takes credit cards of £12,000 and a personal loan of £8,000, and consolidates them either with a £20,000 secured loan or by adding £20,000 to a remortgage. It uses the fixed illustrative rates used across this site.

Three things stand out. Both routes cut the monthly outgoing sharply, from £532 to £190 or £136. Both cost more in total than the £20,000 borrowed, because the debt now runs for 15 or 20 years instead of a few. And the gap between the routes is smaller than the rates suggest: the remortgage is £54 a month and about £1,448 in total cheaper in this example, before any fees, any early repayment charge, or any change to the rate on the rest of the mortgage balance.

That last point is the one people miss. The table shows the consolidated £20,000 only. If a remortgage also moves a £180,000 balance from a low fixed rate to a higher current rate, the extra interest on the £180,000 can outweigh the saving on the £20,000 many times over. Our debt consolidation calculator runs your own figures through both routes.

How does an early repayment charge change the answer?

An early repayment charge, or ERC, is the fee your mortgage lender charges if you repay before a fixed or discounted deal ends, commonly 1% to 5% of the balance, often stepping down each year. A remortgage repays the whole existing mortgage, so the charge applies to the whole balance.

That is the single biggest reason homeowners choose a secured loan. On a £200,000 mortgage with a 3% early repayment charge, remortgaging early costs £6,000 in the charge alone. A secured loan leaves the mortgage in place, so no charge is triggered. Add a new lender's arrangement fee, valuation and legal costs, and the remortgage route can start £7,000 or more behind before a single payment is made. A secured loan that costs a little more each month can still be cheaper overall if the alternative is paying a large charge to leave a deal you would otherwise have kept.

The picture changes near the end of a deal. If your fixed rate ends in six months, waiting until the charge falls away may beat either option today, provided the debts are manageable meanwhile. If your deal has already ended and you are on the lender's standard variable rate, there is no charge and a remortgage becomes the natural first thing to price. See remortgaging on a fixed rate and secured loans on a fixed rate for both sides.

When is a secured loan the better choice?

A secured loan tends to win in four situations.

• You are part way through a good fixed rate. Keeping a low mortgage rate on a large balance is usually worth far more than a lower rate on a smaller consolidation loan. Our guide on keeping your mortgage rate and clearing your debts works through this.
• Your credit has taken a knock. Second charge lenders are built around adverse credit. A remortgage with recent defaults or a CCJ often means moving the whole mortgage to a specialist lender at a higher rate, whereas a secured loan confines the higher rate to the new borrowing. See secured loans with bad credit.
• You need the money quickly. Secured loans commonly complete in two to four weeks. A remortgage typically takes six to eight weeks or longer, because a new lender underwrites the whole mortgage from scratch.
• Your own lender has said no. If your mortgage lender will not lend you more, a second charge lender assesses you on its own criteria and may take a different view. Our guide on being declined for further borrowing explains the options.

A secured loan also suits homeowners who want the consolidated debt on a shorter term than the mortgage, since paying £20,000 off over ten years rather than twenty costs less in interest overall. The trade off is a second monthly payment, and a second lender who can take action against the home if you fall behind.

When is a remortgage the better choice?

A remortgage tends to win when your mortgage deal is ending or has ended, when your credit is clean, and when the whole mortgage would move to a rate you are happy with anyway. In that situation you were going to remortgage regardless, so adding the debt to it costs a single set of fees, keeps one payment, and puts the consolidated borrowing on a mortgage rate rather than a second charge rate.

It also suits larger sums. Many second charge lenders cap loans at a lower combined loan to value than a mortgage lender would allow, so a homeowner consolidating £60,000 or more with plenty of equity often finds the remortgage route more flexible. And if the current mortgage is already on a standard variable rate, moving it to a new deal may cut the payment on the main balance as well as on the debt.

The honest caveat is term. Spreading £20,000 over a 20 year mortgage produces the lowest monthly payment of any route, and the highest total interest. A good adviser will show you the total cost over the term, not just the monthly figure, and asking for the consolidated part on a shorter term, or overpaying, brings the total back down. Our guides on whether consolidating debt into your mortgage is a good idea and whether you can remortgage to pay off debt go further.

Whichever way you lean, get free, impartial advice from MoneyHelper, StepChange or Citizens Advice first if you are already missing payments. Neither route is right if income no longer covers outgoings.

What improves your chances

• Check your mortgage offer for an early repayment charge and note the date it ends; that date often decides the route on its own.
• Add up the total cost of each route over its full term, fees included, rather than comparing monthly payments alone.
• Be honest about your credit file: recent defaults or a CCJ tend to push the answer towards a secured loan.
• Decide how quickly you need the money; a secured loan usually completes several weeks faster than a remortgage.
• Ask the adviser to price both routes side by side; an FCA authorised broker who offers both has no reason to steer you to one.

Alternatives worth considering

Neither route is compulsory. For debts under about £25,000 with a reasonable credit history, an unsecured personal loan avoids putting your home at risk; our secured loan vs personal loan comparison sets out where the cut-over sits. For smaller card balances you can clear within a couple of years, a 0% balance transfer card is often cheaper than any loan, as our balance transfer vs consolidation loan page explains. And if the debts are unaffordable rather than just expensive, a debt management plan through a free charity may be the honest answer; see consolidation vs a debt management plan.