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Secured loan debts. What can happen to my home

A secured loan is a loan attached to your home. If you’re unable to pay the debt, the lender can apply to the courts and force you to sell your home to get their money back.

Because lenders have security of your property, they may offer much lower interest rates than on other types of lending, or they may lend to people with a poor credit history who wouldn’t get an unsecured personal loan. You may also find that you can borrow more through a secured loan than you can through a personal loan

If your circumstances change and you miss payments to a secured loan, you could lose your home.

You may have seen adverts for secured loans on TV. They're often advertised as debt consolidation loans, a way to put all your existing debts into one loan. All of this might sound appealing, but it comes at a very high risk.

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Frequently asked questions

What does a 'secured' loan mean?

A secured loan is a loan attached to your home or a property you own. If you’re unable to pay the debt, the lender can apply to the courts and force you to sell your home to get their money back.

Find out more about home repossession.

How does a secured loan work?

The lender will make you an offer on the basis that they have the right to repossess and sell your property if you fail to make repayments.

Because lenders have security of your property, they may offer much lower interest rates than for other types of lending. They may lend to people with a bad credit history who would find it more difficult to get an affordable unsecured personal loan. However, they should still check that the loan repayments will be affordable for you.

You could also find that you can borrow more through a secured loan than you can through a personal loan.

Can you pay off a secured loan early?

It depends on the agreement. You should make sure you fully understand the terms of the loan before you sign up.

There are often penalties for paying off secured loans early. These are generally known as "early repayment charges".

Are you looking for information about loans to consolidate debt? Find out about secured and unsecured debt consolidation.

Secured loans and debt consolidation

Many secured loans are offered as a way to consolidate your existing debts. The interest rates are often lower than unsecured personal loans because the risk to the lender is reduced when the loan is attached to your property. 

The lower interest rates for a secured loan can make them seem like a good option for debt consolidation, however if your situation changes and you can't afford to pay the loan, the creditor could take action to repossess your property.

If you're considering consolidating your debts it could also be a sign that you're finding it difficult to pay your existing debts. In this case we'd recommend getting expert debt advice on your available options before securing a debt to your home. 

We can help

If you’re struggling to pay your debts and are thinking of taking out a secured loan please speak to us first. We can provide expert debt advice to find a better way to deal with your debts, rather putting your home at risk.

Our free debt advice is tailored to your personal situation, use our online debt advice tool or contact us (free from all landlines and mobiles).