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Flexible low interest secured loan overdraft

12th May 2022

By Alex Walker

Perhaps the best and most flexible secured loan innovation we have seen – Text updated August 2021.

It’s excellent for homeowners needing a large loan between £25,000 and £1 million where they want flexibility and more control to pay low interest charges .     

Who is this secured loan best for?

Really it’s best for any homeowner looking to pay low interest payments on a secured loan where they need a flexible loan amount and only pay interest on the balance at any one time.

One example is a landlord loan or property investor loan. It’s ideal as you can agree a facility – let’s say £100,000 and then withdraw cash and pay it back without penalty and only pay interest on the amount outstanding – so its great for property deposits, buying at auction or refurbishments. 

If planning school fees, this type of loan allows you to budget for the next five years; for example, borrowing £20,000 each year to cover the fees in the knowledge that the facility is there for you but only paying interest on the amount outstanding as it increases each year.

For the most homeowners it works equally well as a low cost secured loan and provides flexibility for such things as doing home improvements, raising deposits to help children buy their first house, weddings etc – especially where the amount of the loan required may not be fully clear at the outset.

It works just like an overdraft, but due to the large loan amounts, it is secured on your home so you could agree a facility between £25,000 and £1 million and then flex the amount you draw down or pay back as often as you like for up to five years without any penalty. 

There is also a version of this loan which can be secured on one or multiple property’s with in a buy to let portfolio which is great for raising house purchase deposits, carrying out refurbishments or buying property at auction; and it will normally be far cheaper than a bridging loan.

What makes this a low cost secured loan?

Competitive interest rates

Since its launch, the rates have remained competitive making this overall one of the best low interest secured loans on the market. But it’s not just about the rates. The over draft nature means you can decrease your debt when it suits you with no penalty so you pay less interest. Then increase the debt when you need to. If you need flexibility this loan allows you to save interest by having unnecessary loan commitments.

It’s a no valuation loan

In most cases there is no requirement for a full internal survey and valuation. The lender normally relies on an electronic / database valuation which costs around £25 rather than many £100’s. This saves borrowers money and time, especially if it’s going to be a loan secured over a portfolio of buy to let properties.

It’s a no “non utilisation fee” loan

Unlike some overdraft type loans, there is no fee of this nature either. A non-utilisation fee means ,whilst the facilities is in place, if you are not using it there will still be charges. So if you had a £100,000 facility but only used £50,000, some lenders charge a small fee for having the facility but not using it. No need to worry; that’s not the case with this loan.

Therefore, this is a comparatively cheap secured loan to arrange, there are no early redemption charges, there are no fees for withdrawing or paying back, you only pay interest on the balance at the time and this flexibility is available to you for the first five years.

If you want to clear the loan in full at any time you can without penalty but at the outset the loan is set up to convert, after five years, to a capital and repayment loan for up to a further 25 years depending on the age of the borrowers.

This means that borrows can enjoy massive flexibility in the first five years but also know that the loan will be paid off in full over a period of time. This can make it preferential to an interest only loan where the balance is still repayable at the end of the term. 

How do I qualify for this flexible low interest secured homeowner loan?

The eligibility criteria is somewhat more relaxed than many other lenders in the sector although you do have to evidence you can afford the loan and must have a relatively good credit history. 

These are some of the key criteria points but note every application is subject to detailed underwriting by the lender

Loans for employed borrowers

Employed applicants can be considered after only three months in a new job.

Loans for self employed

Self-employed applicants need a minimum trading period of 12 months after which they can submit their tax assessments and provide them as evidence of income.

Loans for contractors

Contractors must have at least three months remaining on the contract or have proof of renewal of the contract.

Loan for people on benefits and allowances

100% of most benefits and  allowances are acceptable income 

Loans with a good credit score

Whilst a good credit score is required, small CCJ’s or a couple of missed payment in the last two years may be accepted provided the recent conduct is good. 

Can I get a low interest loan with a bad credit score?

It depends on your credit score and the reason its low. For example it could be because you don’t have much credit – nothing to do with having arrears or bad credit.

We have other secured loan lenders which don’t carry out a credit score so you could still get low interest rates. If you have bad credit such as arrears and CCJ’s we have a number of lenders which cater for this too although the rates will normally be higher – try the poor credit option on our calculator

For people with a poor credit history it is unlikely that they will qualify for this loan – Click here for information on loans with bad credit score

What is the maximum I can borrow against the equity in my house?

As from August 2021, loans are available up to 80% of the property value (including any other charges). Option are available for a first charge, second charge or third charge basis and are subject to full affordability checks and different terms. 

Age and location

This loan is available to homeowners in England Scotland and Wales and terms are available over between 5 and 30 years. Borrowers must be at least 18 at the start of the loan and no older than 75 at the end of the term.

Talk to a Promise Money adviser for more details

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    What best describes your credit rating?

    Perfect: In the last year you have no mortgage arrears, CCJs or defaults. Your credit score is high.

    Your repayments are estimated at

    £249.51 per month

    Secured Loan examples above are based on total borrowing of between 50-75% of the value of your property. Any lender / broker fees can be added to your loan which will increase the repayments and total amount repayable. Discuss this with your Promise adviser.
    REPRESENTATIVE EXAMPLE FOR PERFECT CREDIT HISTORY (with all set up fees added to the loan) – £63,000 over 228 months at an APRC of 4.2% and an annual interest rate of 3.47% (variable) would be £398.62 per month, total charge for credit £24,400.36, total payable £90,885.36. This figure includes a Promise fee of £2,690. Actual repayments depend on your circumstances.

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    Latest Articles

    2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:

    Mortgages and Remortgages

    Representative example

    £80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker / processing fee and £125 application fee. Total repayable £119,873.

    Secured / Second Charge Loans

    Representative example

    £63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, total charge for credit is £42,584.52 which includes a £2,690 broker / processing fee. Total repayable £105,584.52.

    Unsecured Loans

    Representative example

    £4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.



    If you have been introduced to Promise Money by a third party / affiliate, Promise may pay them a share of any fees or commission it earns. Written terms available on request. Loans are subject to affordability status and available to UK residents aged 18 or over. Promise Money is a trading style of Promise Solutions Ltd. Promise Solutions is a broker offering products which represent the whole of the specialist second mortgage market and is authorised and regulated by the Financial Conduct Authority – Number 681423.

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