How a secured loan works, from eligibility to completion
A secured loan, also called a homeowner loan or a second charge mortgage, is a separate loan secured against your home that sits alongside your existing mortgage, so your current deal and rate stay exactly as they are.
A secured loan (also called a homeowner loan or second charge mortgage) is borrowing secured against your property by a second legal charge, behind your existing mortgage. Your mortgage is not replaced, re-priced or touched. You make a second monthly payment to the secured loan lender, typically over 3 to 30 years, and the money is most often used to consolidate credit cards, loans and other unsecured debt into one payment. It suits homeowners who are mid-way through a mortgage deal they want to keep, who have been declined for extra borrowing by their own bank, or whose credit history rules out a mainstream remortgage.
Last updated: 15 September 2026 · Written by The Equiclear Editorial Team
A secured loan is a loan where your home is used as security. If you already have a mortgage, the secured loan lender registers a second legal charge on the property at HM Land Registry, behind your mortgage lender's first charge. That is why the same product is called a second charge mortgage in law and by lenders, a homeowner loan in advertising, and a secured loan in everyday use. All three mean exactly the same thing: a separate loan, from a separate lender, sitting behind your existing mortgage.
Because it is a separate agreement, nothing about your existing mortgage changes. Your rate, your term, your lender and your monthly mortgage payment all carry on as they were. You simply take on a second, independent monthly payment for the new loan. The "second" in second charge describes the order in which lenders are repaid if the property is ever sold: the mortgage lender first, the secured loan lender from whatever is left. That ordering is why secured loan rates are usually higher than first mortgage rates: the second lender carries more risk.
Secured loans in the UK are regulated by the Financial Conduct Authority under the same mortgage rules as first charge mortgages, which means an affordability assessment, regulated advice, a reflection period and the standard risk warnings apply. Second charge lending moved under those rules on 21 March 2016, as set out in the FCA's policy statement PS15/9.
Secured loans are most often used by homeowners in one of four situations. The first is being part-way through a fixed rate you want to keep. Remortgaging to raise money would mean paying an early repayment charge and losing the rate; a secured loan raises the money without touching the mortgage. The second is being declined for extra borrowing by your own lender, which is increasingly common as banks apply tighter affordability tests to existing customers. A secured loan lender assesses you against its own criteria, not your bank's.
The third is credit history. Specialist secured loan lenders work with homeowners who have missed payments, defaults, CCJs, or a past debt management plan, tiered by how recent and how large the issues are. Mainstream remortgage lenders often will not. The fourth is speed and size: secured loans are usually quicker to arrange than a remortgage, and the amounts available (commonly £10,000 to £500,000) are far higher than unsecured lenders offer.
The main use is debt consolidation, which accounts for at least 60% of new second charge lending in the UK according to FLA figures, but home improvements, a tax bill, a deposit for a family member or a business injection are all common purposes.
| Situation | Why a secured loan fits |
|---|---|
| Mid-way through a fixed rate | No early repayment charge; your deal stays |
| Own lender said no to borrowing more | Different lender, different criteria |
| Missed payments, defaults or a CCJ | Specialist lenders price for adverse credit |
| Need more than an unsecured lender offers | Larger amounts secured on equity |
| Self-employed or complex income | Many specialist lenders take a broader view |
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Two limits apply: equity and affordability. On equity, lenders look at the combined loan to value, meaning your existing mortgage plus the new secured loan as a share of your property's value. Many secured loan lenders will go to 85% combined, some higher for strong applicants, and lower where credit history is more challenging. If your home is worth £250,000 and your mortgage is £150,000, a lender working to 85% combined would allow total borrowing of £212,500, leaving up to £62,500 for the secured loan before affordability is considered.
On affordability, the lender checks that you can meet the new monthly payment alongside your mortgage and your other commitments. Where the loan is for debt consolidation, most lenders treat the debts being cleared as gone, since they will be repaid on completion, which makes the calculation more achievable than a remortgage lender that counts them as still owed.
Minimum loans are typically £10,000, though a few lenders go lower. Terms run from 3 to 30 years. A shorter term means a higher monthly payment and less interest overall; a longer term does the reverse. An adviser will usually show you the same amount over two or three terms so you can see the trade-off in pounds. Our guide to how much you can borrow goes into the calculation in more detail.
Secured loan rates are set by the lender according to your combined loan to value, your credit history, the amount and the term. Lower combined LTV and a clean file get the lowest rates; higher LTV or recent adverse credit push the rate up. Rates are usually higher than first charge mortgage rates and usually lower than credit card or unsecured loan rates. Most secured loans are offered on a fixed rate for an initial period, then move to the lender's variable rate, and many allow overpayments without penalty after the fixed period.
Fees to expect: a lender arrangement or product fee, a valuation fee (some lenders use an automated valuation for lower amounts), a broker fee where one applies, and an administration or legal fee for registering the charge. Fees are usually added to the loan, which is convenient but means you pay interest on them, so ask for the total cost with and without fees added.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
| What you're paying now | Amount |
|---|---|
| Credit cards (£12,000 at 24.9% APR, minimum payments) | £350/month |
| Personal loan (£8,000 at 12.9% APR, 5-year term) | £182/month |
| Current total monthly payments | £532/month |
| Consolidated with a secured loan | Amount |
|---|---|
| £20,000 secured loan at 7.9% over 15 years | £190/month |
| Total repayable over 15 years | £34,196 |
In this example the monthly outgoing on those debts falls from £532 to £190, and your mortgage payment is unchanged. The £20,000 costs £34,196 to repay over 15 years; over 10 years it would be £242 a month and £29,000 in total. The right term is the shortest one you can comfortably afford.
The process is quicker and lighter than a remortgage because your existing mortgage is not being replaced. It typically runs like this. First, a fact find with a qualified adviser: your income, outgoings, property value, mortgage balance, credit history and what you want to borrow. Checking your options at this stage will not affect your credit score. Second, the adviser sources lenders whose criteria you meet and presents the options, including the total cost of each.
Third, the application: proof of income, bank statements, your latest mortgage statement, and settlement figures for any debts being consolidated. The lender values the property, often using an automated or desktop valuation for lower amounts, and may request your existing mortgage lender's consent to the second charge, which is a formality with most lenders. Fourth, the offer, followed by a reflection period of at least seven days, required by the FCA's mortgage rules (MCOB 6A.3). Finally, completion: the lender releases the funds, pays your creditors where the purpose is consolidation, and registers its charge at HM Land Registry.
From application to funds, two to four weeks is typical, and some lenders complete faster for straightforward cases. The main causes of delay are missing documents and slow settlement figures from creditors, both of which an adviser will chase for you.
The defining risk is in the name. The loan is secured on your home, so if you do not keep up the payments the lender can, ultimately, repossess the property. That is true of your mortgage already, but a secured loan adds a second obligation with the same consequence. Any decision to move unsecured debt onto your home should start with an honest look at whether the new payment is comfortable, not just lower.
The second risk is cost over time. Because the loan can run for up to 30 years, a low monthly figure can conceal a high total. Always ask for the total repayable and compare terms. The third is rate: secured loans are priced above first mortgages, so if your fixed rate has ended and your credit is clean, a remortgage may be cheaper and an adviser should say so.
Two practical points. Having a second charge on the property can complicate a future remortgage, because a new first lender will need the second charge lender's agreement or the loan to be repaid from the proceeds; our guide on whether a secured loan affects your mortgage covers this. And consolidation only works if the cleared cards are not run back up. If debt is a symptom of income not covering outgoings, free advice from MoneyHelper, StepChange or Citizens Advice should come before any new borrowing.
A secured loan is usually the right tool when keeping your existing mortgage matters, whether because of a good fixed rate, an early repayment charge, or a lender relationship you do not want to disturb. It is also the realistic route when your own bank has declined extra borrowing, when your credit file has recent blemishes, or when you need more than unsecured lenders will provide.
It is usually the wrong tool when your mortgage deal has already ended and your credit is clean, because a remortgage will normally give you a lower rate and a single payment. It is also rarely worth it for small amounts, where the fees eat the saving and an unsecured loan or balance transfer would do the job without touching your home.
The way to know is to see real figures. A qualified adviser can check your equity and affordability against current lender criteria and show you the monthly payment and total repayable for a secured loan, alongside a remortgage for comparison, before you commit to anything. Checking your options with Equiclear is free and will not affect your credit score.