Borrowing against your home

If you've searched for a homeowner loan, you're probably asking a fairly simple question: can I borrow money against my house? The answer is yes, and the product you're looking for goes by a few different names depending on where you read about it. You might see it called a homeowner loan, a secured loan, or a second charge mortgage. They're all exactly the same thing: a loan that uses your home as security, sitting alongside your existing mortgage rather than replacing it.

"Secured" simply means the lender has a legal claim on your property if you stop paying. Your mortgage lender already has this claim, and they're known as the "first charge". A homeowner loan lender takes a "second charge", meaning they're second in line if your home is ever sold, behind your mortgage lender. That's where the term second charge mortgage comes from, even though it isn't a mortgage in the everyday sense of buying a house, it's a loan that works alongside one you already have.

Because it's a separate agreement, taking out a homeowner loan doesn't touch your existing mortgage at all. Your rate, your deal, your lender, all stay exactly as they are. For a lot of homeowners, that's the whole point: if you're partway through a mortgage deal you're happy with, a homeowner loan lets you borrow more without disturbing it, or paying anything to leave it early the way you would with a full remortgage.

Most people searching for this aren't after the technical detail, they're trying to work out whether it's even possible for someone in their position. If you own your home, even with a mortgage still outstanding, and you've built up some equity in it, the answer is generally yes. What varies from person to person is how much you could borrow and at what rate, which depends on your property, your income and your credit history, not on any of the three names the product goes by.

Homeowner loans tend to suit a fairly specific situation: you own your home, or most of it, you've got some equity built up in it, and you want to borrow a larger amount than a typical unsecured loan would stretch to, often to bring together several existing debts into one payment. If that sounds like where you are, it's worth understanding roughly what to expect before you go any further.

It's less likely to be the right fit if you've only got a small amount of equity, if the amount you want to borrow is small, say under £5,000, or if you're not confident you could keep up a new monthly payment even if it turns out lower than what you're paying now. In those situations, the fees involved, valuation, legal work, lender or broker fees, can outweigh what you'd actually save, and a smaller unsecured loan or a 0% balance transfer card might work out better for you.

To put "some equity" into a concrete example: if your house is worth £230,000 and you owe £150,000 on your mortgage, you have £80,000 of equity, though lenders won't let you borrow against all of it. If a lender is comfortable lending up to 85% of your home's value in total, that works out at £195,500 combined borrowing, which, after your existing £150,000 mortgage, leaves up to £45,500 potentially available, subject to you passing the affordability check on top of the equity being there. Every lender sets its own limit, so this figure moves depending on who you apply with.

It's also worth being honest with yourself about why you're borrowing. A homeowner loan can turn several unmanageable payments into one affordable one, and that genuinely helps a lot of people get back on top of things. What it can't do is fix the underlying reason the debt built up in the first place. If your income has recently dropped, or you're already struggling to meet your current payments, it's worth talking to a free debt advice charity before adding any new borrowing, secured or not. We've listed some further down this page.

The biggest difference between a homeowner loan and an ordinary unsecured personal loan is security. With a personal loan, if you stop paying, the lender can chase the debt and it will damage your credit file, but they can't take your home. With a homeowner loan, your home is the security for the borrowing, which is a materially bigger risk if things go wrong. It's worth sitting with that difference properly before deciding either way, rather than skipping straight to the numbers.

In exchange for that extra risk, homeowner loans usually let you borrow more, and over a longer period, than most unsecured lenders will offer. A typical personal loan might max out somewhere around £25,000 to £35,000 over up to 7 years; a homeowner loan can often go up to £100,000 or more, over terms up to 25 or 30 years, because the lender has your property as security if things go wrong.

Which one makes more sense for you comes down to how much you need to borrow and how you feel about that trade-off. If an unsecured personal loan covers what you need, it keeps the debt off your property entirely, and that's worth something in its own right. If you need to borrow more than an unsecured lender will offer, or you want a lower monthly payment than a shorter unsecured term would give you, a homeowner loan is generally where people end up looking next, and where a broker can properly compare lenders for you.

Fees are worth comparing too, not just the rate. An unsecured personal loan usually has few or no upfront fees. A homeowner loan typically involves a property valuation and some legal work, which together might run to a few hundred pounds, sometimes added to the loan rather than paid upfront. For a larger amount borrowed over a longer term, those fees are usually small next to the rate saving, but for a smaller amount, it's worth asking your broker to show you the fees in cash terms, not just as a percentage, so you can see the full picture before deciding.

Numbers make this easier to picture than percentages on their own. Here's a plain example of what swapping several separate debts for one homeowner loan payment could look like in practice.

In this example, the monthly payment drops from £272 to £95, a saving of £177 a month. But look at the total repayable, £17,100, against the £10,000 originally borrowed. That's the trade-off in plain terms: a lower monthly payment, spread over a much longer time, usually means paying more in total once you add it all up. Neither number tells the whole story on its own, which is exactly why it's worth seeing both, side by side, before you decide anything.

This is the part that's easy to skim past, so it's worth saying plainly: a homeowner loan is secured against your house. If you don't keep up the repayments, your home may be repossessed. That's true whether the loan is called a homeowner loan, a secured loan, or a second charge mortgage, the name doesn't change what's actually happening, which is unsecured debt being turned into debt secured on your property.

This isn't a reason to automatically avoid a homeowner loan. For a lot of homeowners with a stable income and genuine equity, it's a sensible way to bring an unmanageable set of payments down to one they can comfortably afford. It is a reason to think it through properly rather than rushing into it because the monthly figure looks better than what you're paying now. Ask yourself honestly whether the new payment would still be affordable if your circumstances changed a little, not just whether it fits right now while everything's fine.

It's also worth checking whether a lender allows overpayments without penalty, commonly up to around 10% of the balance each year, so that if your budget allows it later, you can pay the loan down faster than the contractual term and reduce the total interest you'd otherwise pay. A broker can confirm this for any lender you're considering before you commit to anything.

Before you sign anything, it's also worth ruling out the cheaper options first. If your total debt is fairly small, a 0% balance transfer card can work well if you're confident you can clear it within the promotional period, usually 12 to 30 months, without missing a payment. And if you're struggling to meet even your current payments, taking on more borrowing, secured or not, is unlikely to fix the underlying problem on its own. A free debt advice charity can talk you through every option, including ones that don't involve your home at all, before you decide anything.

If you decide to go ahead, the process is more straightforward than it might sound. You tell a broker roughly how much you want to borrow, what your home is worth, and what you still owe on your mortgage. They check this against affordability, essentially your income against your outgoings once the new payment is added, and your credit history, to work out which lenders would actually consider you and at roughly what rate.

You'll then see options side by side rather than a single take-it-or-leave-it offer, which is one of the main benefits of going through a whole-of-market broker instead of approaching one lender directly yourself. Once you choose a lender, there's typically a valuation of your property and some legal work, similar in shape to when you first took out your mortgage, before the loan completes and the funds are released to you.

A homeowner loan can often complete faster than a full remortgage, sometimes within a few weeks, because it doesn't involve unwinding your existing mortgage arrangement. Timelines still vary by lender and how quickly paperwork moves on your side, but your broker will give you a realistic estimate once they know which lender fits your situation and your credit history.

Two things are worth expecting along the way. First, a valuer will usually visit your property, or in some cases use an automated valuation based on similar sold properties nearby, to confirm what it's actually worth rather than relying on a guess. Second, a solicitor handles the legal side, which is fairly standard paperwork rather than anything to worry about, and is often the same solicitor firm suggested by your broker or lender, though you're free to use your own if you'd rather. Neither step is something you need to arrange yourself, your broker coordinates it, but knowing roughly what's coming makes the whole thing feel a lot less unfamiliar.