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Typical uses of a secured loan

Typical uses of a secured loan

A secured loan (or second mortgage) is a way of borrowing using a property (often a home) as security. Borrowing can be for personal or business use, and for a several potential uses – we explore these below.


Secured on a borrowers main residence or for personal use…

Loans of this nature tend to be regulated by the Financial Conduct Authority and are sold on a fully advised basis. Common regulated loan purposes include:

  • Home improvements
  • Debt consolidation
  • Deposit to buy another property
  • Short term lending to buy a new home before selling existing home.
  • Tax bills
  • Clear debt management plans or IVA’s
  • Holidays and weddings
  • To fund property purchase for a family member
  • To inject capital in to a business

It’s more common that the loan purpose is a combination of the above and other purposes.


Secured on a BTL property or “Business Borrowing” secured on main residence…

These loans tend to be non–regulated. You are treated as a business person rather than a consumer. There is less regulatory protection for borrowers and the process is normally less long winded. Rather than being given advice your broker may offer you choices which most closely match your stated requirements so you can choose which you feel suits you best. Common non–regulated loans purposes include:

  • Second charge loan on a BTL property to raise a deposit to buy another
  • Portfolio second charge secured against multiple BTL properties
  • Second and third charge business loans for start up businesses
  • Business loans for expanding existing businesses
  • Business loans for recovering businesses with poor historic trading or adverse credit

Always read the paperwork you are given carefully to unsure the product or service you are offered matches your requirements. If you have any doubts or misunderstanding, always ask.

Find a secured loan

Enter some details and we'll estimate your repayments on our popular loan plans – this will NOT affect your credit rating.

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For how long?

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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.

By submitting any information to us, you are confirming you have read and understood the Data Protection & Privacy Policy.

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.


THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME

REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.


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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