Secured Loans are becoming increasingly popular but what exactly are they? And how do they differ from Unsecured Loans?

In principle Secured Loans are very much like any other type of loan in so much that you borrow money at an agreed rate of interest and agree to repay both the interest and the capital under a repayment schedule.


The main difference between Secured Loans and Unsecured Loans is that you use your home as collateral (a guarantee) for the Secured Loan in much the same way as a mortgage. In fact Secured Loans are also known as second mortgages.


Secured Loans often attract a competitive rate of interest but there are other attractions which can often make them more preferable than Unsecured Loans, these include;

Loan Term

Repayment terms can often be great with Secured Loans than Unsecured Loans. This means that monthly repayment can be lower however, longer terms will typically mean you pay more interest.

Large Loans

Secured Loans are often used to borrow large loans. Like all loans, the amount you can borrow is largely dependant upon your income however, with Secured Loans this is also combined with the amount of Equity you have available in your home which is to be used as security.

Self Certification

With the changes in modern work patterns Self Certification has become common. Self Certification (or Self Cert) is the process whereby borrowers who find it difficult to prove their income are allowed to state their level of income without verification. This is a particularly useful process for borrowers who are Self Employed and find it difficult to accounts for their business.

Credit History

Secured Loans can often be favourable to borrowers who have experienced problems with their credit history. For instance, if you have fallen into arrears with debts or have incurred some County Court Judgments (CCJ).

Loan Purpose

Secured Loans can often be used for any purpose including Debt Consolidation, Home Improvements, car purchase, business use and holidays. Some unsecured loan providers restrict the purpose of the loan.


For further Information go to our Secured Loan Guide


The content, advice and any recommendations given on this page or any page of our website is given without legal responsibility. For specific advice about your own personal circumstances you should seek independent advice for example from your local citizens advice bureau, a solicitor or an accountant.


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