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Secured loans are loans attached to your home or other assets

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How do secured loans work?

Lenders make offers on the basis that, if you fail to meet the payments, they then have the right to repossess and sell your home or asset to cover what you owe.

Because your home or asset has been put up as collateral, lenders may offer lower interest rates than those you might see with other types of lending. They may also opt to lend to those with bad credit scores, who may struggle to get affordable unsecured personal loans. Secured loans are a much riskier option of borrowing.

Key facts about secured loans
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Your asset could be repossessed if you fail to make payments on your secured loan

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They may be available for people with poor or no credit history

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Lower interest rates

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You can potentially borrow more through a secured loan than through a unsecured personal loan

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It is possible to pay off secured loans early but you may have to pay early repayment charges

Are you in secured Loan arrears?

What to do
  • Contact your lender as soon as you think you may have trouble making payments
  • Get help early on as this can potentially prevent you from losing your home or asset
  • Consider applying for breathing space, which can help provide relief if you’re struggling with debt
  • Seek independent and impartial debt advice
What about house repossession?
  • Repossession is a legal process whereby secured loan providers can assume ownership of a property
  • This is used as a last resort
  • If your lender gets in touch regarding secured loan arrears, don’t ignore them
  • If your lender can’t get in contact with you, they are more likely to go to court
  • Debt management plans and budgeting tools can help regain control of your finances
What is breathing space?
  • As part of the debt respite scheme, you can apply for breathing space to help if you’re struggling with debt
  • Typically, the breathing space period is up to 60 days
  • They prevent additional interest and charges from building up
  • Lenders are also unable to enforce debt collections or pursue legal proceedings during the breathing space period
What to do if you’re facing legal action
  • You will be notified if your creditor intends to pursue legal proceedings, but this doesn’t necessarily mean you’ll lose your home
  • If you can prove you have a plan to repay your arrears and can afford to do so, the courts may allow you to keep your home
  • Seek professional and impartial debt advice as soon as you can

What Bailiffs...

  • Contact your lender as soon as you think you may have trouble making payments
  • Get help early on as this can potentially prevent you from losing your home or asset
  • Consider applying for breathing space, which can help provide relief if you’re struggling with debt
  • Seek independent and impartial debt advice
  • Repossession is a legal process whereby secured loan providers can assume ownership of a property
  • This is used as a last resort
  • If your lender gets in touch regarding secured loan arrears, don’t ignore them
  • If your lender can’t get in contact with you, they are more likely to go to court
  • Debt management plans and budgeting tools can help regain control of your finances
What Bailiffs...
  • As part of the debt respite scheme, you can apply for breathing space to help if you’re struggling with debt
  • Typically, the breathing space period is up to 60 days
  • They prevent additional interest and charges from building up
  • Lenders are also unable to enforce debt collections or pursue legal proceedings during the breathing space period
  • You will be notified if your creditor intends to pursue legal proceedings, but this doesn’t necessarily mean you’ll lose your home
  • If you can prove you have a plan to repay your arrears and can afford to do so, the courts may allow you to keep your home
  • Seek professional and impartial debt advice as soon as you can
How can I manage secured loans?

All secured loans will give lenders the right to repossess your home if you fail to make repayments. The money from the property will be shared out among the lenders in the order that the loans were given.

If you’re struggling with existing debt at the moment, it could be beneficial to seek impartial debt help and advice.

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Why choose Fresh Start UK?

Fresh Start UK has helped more than 12,000 people gain control of their finances and become debt-free. If you’re struggling with debt and finding it tough to keep up with your bills, speak to an advisor today.

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Final points to consider

Do you feel as though you need help with your finances? A debt management plan can help you do just that, reducing your stress and worry immediately.

As a leading debt management company, Fresh Start deals with thousands of cases each year and is able to provide our clients with confidential advice to prevent debts from becoming insurmountable. Get in touch with us today to find out more.

Ready to get started on the path to financial freedom?
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Money Helper has replaced the Money Advice Service and brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.

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