Borrowing Against Your Home or Another Asset
A secured loan is borrowing backed by an asset.
For homeowners, this commonly means borrowing money secured against your home. Some secured borrowing may use another asset instead.
Because the lender has security, you may be able to borrow more or over a longer period than with an unsecured personal loan.
But there is a major difference:
Your home or other asset could be at risk if you do not keep up the repayments.
How Does a Secured Loan Work?
With an unsecured personal loan, the borrowing is not directly secured against your home.
With a secured loan, the lender takes security over an asset.
For homeowners, you may see terms such as:
- Secured loan
- Homeowner loan
- Second mortgage
- Second-charge mortgage
A second-charge mortgage is additional borrowing secured against a property that already has a first mortgage.
Your original mortgage normally remains in place, and the second loan is a separate financial commitment.
Why Do People Use Secured Loans?
Secured loans can be used for purposes such as:
- Home improvements
- Large planned expenses
- Consolidating existing debts
- Other substantial borrowing needs
The ability to borrow a larger amount does not mean that doing so is appropriate.
Before taking secured borrowing, ask:
Do I need to borrow this money?
Could I use savings or another option instead?
Could I afford both this loan and my existing mortgage if my circumstances changed?
Your Home Is at Risk
This is the most important difference between secured and unsecured borrowing.
If a loan is secured against your home and you cannot maintain the repayments, the lender may ultimately take action that puts your home at risk.
Second-charge mortgages are regulated mortgage contracts in relevant circumstances, and mortgage lenders have rules governing how they deal with borrowers experiencing arrears and financial difficulty.
However, those protections do not make missed payments harmless.
Do not secure borrowing against your home without understanding the consequences.
Secured Loan or Personal Loan?
A secured loan may allow:
- Larger borrowing
- A longer repayment period
- Potentially lower interest rates than some unsecured borrowing
But it also introduces the risk to the asset providing the security.
A personal loan is normally unsecured.
That does not mean an unsecured loan is risk-free. Missing repayments can still damage your credit record and lead to debt-recovery action.
The important difference is that your home is not normally being offered directly as security for an ordinary unsecured personal loan.
Learn more about personal loans →
Look Beyond the Interest Rate
A lower interest rate can make secured borrowing look attractive.
But the interest rate alone does not tell you what the loan will cost.
Compare:
- Amount borrowed
- Interest rate
- APRC or other applicable cost information
- Monthly repayment
- Repayment term
- Arrangement and broker fees
- Other charges
- Early repayment charges
- Total amount repayable
MoneyHelper warns that secured loans are often repaid over longer periods, which can mean paying more interest overall even where the interest rate looks relatively low.
A Longer Term Can Be Expensive
Imagine borrowing the same amount under two different arrangements.
One is repaid over:
5 years
The other over:
15 years
The longer loan may produce a much lower monthly payment.
That can make it look more affordable.
However, you may be paying interest for an additional ten years.
So always compare:
What will this cost me each month?
and
What could I repay altogether?
Do not choose a long repayment term simply because it produces the smallest monthly figure.
Fees Can Make a Significant Difference
Secured borrowing can involve fees.
These might include:
- Broker fees
- Arrangement fees
- Valuation costs
- Legal or administration costs
- Early repayment charges
Some fees may be added to the loan rather than paid upfront.
If that happens, you may then pay interest on those fees as part of the borrowing.
MoneyHelper specifically warns that some secured loans have expensive arrangement fees and other charges.
The FCA’s 2026 review also raised concerns about fees in parts of the second-charge mortgage market.
Check Whether the Rate Is Fixed or Variable
Do not assume the interest rate will remain unchanged.
Some secured loans have fixed rates.
Others may have variable rates, meaning the rate—and potentially your repayments—can change.
MoneyHelper specifically highlights this risk with variable-rate secured borrowing.
Ask:
Is the rate fixed or variable?
If variable:
Could I still afford the repayments if the rate increased?
Secured Loans for Debt Consolidation
Some people use secured loans to repay credit cards, personal loans or other debts.
This is known as:
Debt consolidation
Combining several repayments into one can appear simpler.
It may also reduce the monthly payment.
But that does not automatically mean you are saving money.
You may be:
- Extending the debt over many more years
- Paying more interest overall
- Paying additional fees
- Turning previously unsecured debts into borrowing secured against your home
That last point is particularly important.
A credit-card balance that was not secured against your home could effectively become part of borrowing that is secured against it.
Be Particularly Careful With Debt Consolidation
The FCA’s March 2026 review specifically examined second-charge mortgages and found concerns in parts of the market.
Among the issues identified were affordability assessments that appeared to overlook important living expenses and recommendations of debt consolidation where it was not clear that consolidation was appropriate.
So before consolidating debts into secured borrowing, compare what happens:
before consolidation
and
after consolidation
Look at the total cost, repayment period, fees and risk—not merely whether the new monthly payment is lower.
How Much Can You Afford?
Start with your household budget rather than the maximum amount available.
Include:
- Existing mortgage
- Council tax
- Energy and water
- Food
- Transport
- Insurance
- Existing borrowing
- Family costs
- Savings
- Other essential spending
Then consider what would happen if:
- Interest rates increased
- Your income fell
- You became unable to work
- Household costs increased
- You faced an unexpected expense
The FCA’s recent review emphasised the importance of proper affordability assessment in this market.
How Much Equity Do You Have?
For borrowing secured against a home, the property’s value and the borrowing already secured against it are important.
For example:
Property value: £250,000
Existing mortgage: £150,000
The difference is:
£100,000
This gives a simple indication of the equity before considering additional secured borrowing.
However, that does not mean £100,000 is automatically available to borrow.
A lender will consider its lending criteria, affordability and the overall borrowing secured against the property.
Property values can also fall as well as rise.
Should You Borrow More on Your Existing Mortgage Instead?
If you already have a mortgage, a secured loan is not necessarily your only way of raising additional money.
Depending on your circumstances, possibilities could include:
- A further advance from your existing mortgage lender
- Remortgaging
- A second-charge mortgage
- Unsecured borrowing
- Using savings
- Delaying the expenditure
Each can have different rates, fees, terms and consequences.
For example, changing your existing mortgage could affect a favourable interest rate or trigger an early repayment charge.
So compare the whole financial effect, not simply the rate attached to the new money.
Check Early Repayment Charges
Your circumstances may change.
You might want to:
- Repay the loan early
- Make overpayments
- Remortgage
- Sell your home
Check what happens in each situation before agreeing to the borrowing.
Early repayment charges can apply to mortgage borrowing, and the Financial Ombudsman Service deals with complaints concerning whether such charges were properly explained or fairly applied.
What Happens If You Move Home?
If the loan is secured against your property, selling that property can affect the borrowing.
You may need to repay the secured loan from the sale proceeds.
Do not assume the loan can simply move with you to another property.
If you expect to move during the proposed loan term, ask the lender or broker exactly what would happen.
If You Begin to Struggle With Payments
Do not ignore the problem.
Contact the lender as early as possible.
The Financial Ombudsman Service says regulated mortgage lending—including first and second-charge mortgages—is subject to rules governing how lenders deal with borrowers, including those experiencing arrears and financial difficulty.
If you are struggling with several debts, consider obtaining free, independent debt guidance before taking additional borrowing.
Taking another loan is not automatically the solution to existing financial difficulty.
Compare More Than the Monthly Payment
When comparing secured loans, look at:
Amount borrowed
Are you borrowing only what you need?
Security
Exactly what asset is securing the borrowing?
Interest rate
Is it fixed or variable?
Monthly payment
Can you comfortably afford it?
Term
How long will you be making payments?
Total amount repayable
What could the borrowing cost overall?
Fees
What will you pay upfront or add to the loan?
Early repayment
What happens if you want to clear it sooner?
Existing mortgage
How does the new borrowing interact with it?
Risk
What could happen if you cannot maintain the repayments?
Secured Loan Checklist
Before proceeding, ask:
Do I really need to borrow?
Consider alternatives first.
Why am I securing this borrowing?
Understand what you gain by doing so.
Am I putting my home at risk?
Know exactly what provides the security.
Can I afford the repayments comfortably?
Use your real household budget.
Could I cope if the rate or my circumstances changed?
Consider more than today’s payment.
What will I repay altogether?
Look beyond the monthly amount.
What fees are involved?
Check whether any are being added to the borrowing.
Am I consolidating debt?
Make sure you are not simply converting short-term unsecured debt into expensive long-term borrowing secured against your home.
What happens if I repay early or move?
Know before you sign.
Compare Secured Loans
Secured loans can offer access to larger amounts of borrowing and longer repayment periods.
Those features can be useful in some circumstances.
They can also make it easier to take on a large, long-term financial commitment secured against your property.
Energility’s loan comparison service is coming soon.
Until then, our guides can help you understand what you are comparing.
The Bottom Line
The defining feature of a secured loan is not the interest rate or the amount you can borrow.
It is the security.
If that security is your home, the decision deserves particular care.
Compare the monthly payment, but also examine:
the total cost, repayment term, fees, interest-rate risk and consequences if you cannot repay.
And be especially cautious about using secured borrowing simply to make existing debts appear more manageable.
A lower monthly payment is not necessarily a cheaper loan—and moving unsecured debts onto your home can fundamentally change the risk you are taking.
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