Types of secured loans

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Types of Secured Loans Available

What types of loans are available?

Secured Loans fall into two camps, regulated and unregulated. Regulated secured loans offer customers maximum protection from bad practice. This includes strict rules and an automatic right to use the Financial Ombudsman Service. The property offered as security is the main factor in determining whether a loan is regulated or not. Loans secured on residential homes are normally regulated. Loans secured on property other than homes (for example, buy to let or commercial buildings) are normally unregulated.

Loan Types

Capital and Repayment

Each repayment pays back some capital (amount borrowed) and interest. This means the amount outstanding reduces gradually over time until it is settled in full at the end of the term (providing all repayments were made on time).

Interest Only

Some lenders offer interest only loans. As the name suggests repayments cover purely interest so the capital (amount borrowed) is not reducing at all. The balance of the loan will be the same at the end of the term as it was at the start. An “exit route” approved by the lender is needed. This is a source of money enough to settle the loan in full by no later than the end of the agreed term. For example an endowment policy or sale of a house.

There are also different ways in which a lender can apply their interest rates:

Standard Variable Rate (SVR)

A standard variable rate means the rate is set by the lender and can change throughout the duration of the loan. Though a lender will aim to be competitive in the market you are still by and large in their hands and the rate can go up or down at any time.

Base Rate Tracker

Similar to a Standard Variable Rate the interest rate is set at a margin above the Bank of England’s base rate. For example if the base rate was 1% and the lender was offering base rate plus 2.5% the rate charged would be 3.5% (1% + 2.5%) . If the base rate went up to 2% the rate charged would become 4.5% (2% + 2.5%). It would always be the same % above the base rate. An advantage of this type of loan is the rate only goes up when the Bank of England’s base rate goes up. In recent years the base rate has been low and hasn’t fluctuated greatly.

Fixed Rate Loans

Interest is fixed for a specified period of time. For example, for the first 1 to 5 years. The advantage of this type of loan is that it gives the customer a guaranteed monthly payment that will not change during the fixed rate period. At the end of the fixed rate period the loan normally switches to the lenders standard variable rate.

Capped Rate Loans

Capped rate loans have a maximum above which they can not go. For example a loan capped at 5% could be no more than 5% even if the lenders standard variable rate were higher. The advantage of this type of loan is that they give the customer some certainty and protection from rising interest rates.

Discounted Rate

Lenders offer discounted rates to entice customers to apply. They discount (reduce) the normal rate applicable in an attempt to look more attractive. For example if the standard variable rate was 5% and the lender was offering a 2% discount the rate charged would be 3%. The discounts apply for a set period only which is made clear at the start, normally 1 or 2 years.

How to apply for a secured loan

Most secured loans are applied for through intermediaries / advisers like Promise Money. They tend to have access to a wide range of products. This maximises the options they have to recommend a loan which suits the customer’s needs.

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Whole-of-Market Guidance for Types Of Secured Loans

Securing competitive terms on types of secured loans requires expert underwriting knowledge. In addition, our specialist broker team works directly with over 90 specialist lenders across the UK.

Consequently, reviewing your types of secured loans options with an FCA-authorised specialist credit broker ensures whole-of-market access while avoiding unnecessary fees and delays.

Specialist Underwriting & Whole-of-Market Access

Because specialist lending facilities require bespoke underwriting, comparing lenders across the UK is essential. Explore our complete guide to Secured Loans Desk to understand how different lending criteria apply to your requirements.

Promise Money is an independent credit broker authorised and regulated by the Financial Conduct Authority (FRN 681423). Our experienced team reviews your specific circumstances to secure optimal terms across 90+ UK lenders.

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Key Takeaways: Types Of Secured Loans Checklist

Additionally, property valuations can often be expedited using automated models, significantly reducing upfront costs and surveyor delays.

Furthermore, specialist secured loan lenders assess affordability using total household income and realistic expenditure assessments.

Consequently, homeowners can secure substantial borrowing amounts even with historic credit blips or non-standard employment income.

Therefore, working with Promise Money ensures you compare optimal rates and terms across 90+ UK specialist lenders.

Specifically, flexible repayment options—including fixed, variable, and interest-only structures—can be tailored to your monthly budget.

Moreover, your existing low-rate primary mortgage remains 100% untouched, avoiding early repayment charges.

In addition, loan proceeds can be used for home improvements, debt consolidation, tax bills, or major personal investments.

Crucially, borrowers facing adverse credit, defaults, or past CCJs can secure competitive homeowner loan terms through our panel.

Key Criteria & Application Guidance

In practice, our dedicated loan advisers manage the entire application from initial quote through to fund release.

Above all, borrowing against your home equity typically offers lower monthly repayments than short-term unsecured credit.

As a result, homeowners retain complete financial control and enjoy clearer, more manageable single monthly commitments.

After all, independent whole-of-market advice ensures you never pay unnecessary broker fees or inflated interest rates.

Meanwhile, loans from £10,000 to £2,500,000 are available over flexible terms ranging from 3 to 30 years.

Indeed, rapid decision turnaround gives you the confidence to plan major financial commitments without unnecessary waiting.

Finally, clear illustrations provide total transparency regarding interest rates, lender fees, and total repayable amounts.

Unlike high street banks, specialist secured lenders take a common-sense approach to complex income and contractor earnings.

Fortunately, consolidating higher-interest credit cards and personal loans into one secured facility can substantially reduce outgoings.

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