You should think carefully before securing other debts against your home because consolidating debts could increase the total amount you pay back. Your home may be repossessed if you do not keep up repayments on your mortgage.
When you take out a homeowner secured loan, you borrow a lump sum of cash against your home and repay it in monthly instalments (including interest) over an agreed number of years.
A secured homeowner loan has its own rate and terms so you could borrow over a shorter period than remains on your current mortgage, which means you may pay back less in the long term compared to remortgaging.
If you’ve already got a good existing mortgage deal or your credit has worsened since taking out your first mortgage, remortgaging to raise the funds could mean paying a higher interest rate on the whole new mortgage. Taking out a homeowner loan means you would only be paying the higher rate and extra interest on the new amount you want to borrow.
If your current mortgage has a high early repayment charge, it might be cheaper for you to take out a secured homeowner loan rather than remortgaging to release equity from your property. Our qualified mortgage advisers can talk to you about your circumstances and help you identify what’s best for you.
You’re self-employed (with just 12 months’ trading), have more than one income, or have a zero-hours contract
You’ve already retired, or will retire before paying off the loan
Your credit history includes arrears, defaults or CCJs
Your home is made of non-standard materials like concrete or timber, or it’s a flat in a tower of six or more storeys
Do you want to understand the potential cost of your mortgage or loan?
We can give you an idea of the monthly costs with just a few details like the property value, your deposit amount and how long you need the loan to last.
Submit enquirySelf-employed Malini runs her own ceramics design company. Having previously taken out a loan with Together to get her business off the ground, she contacted us to see what finance was available for home improvements including installing a new kitchen and bathroom, and landscaping her garden. Malini applied for a secured homeowner loan of £73,595 to carry out the works on her £425,000 detached home and to pay off credit card debt of about £17,000.
Malini had a favourable rate on her mortgage with a bank and contacted them to extend her borrowing. However her bank turned her down because of her credit card debt. She said:
“The loan [Together] offered made sense as it was at a lower rate than the one I was paying for my credit card. One good thing is that Together automatically pays off all your unsecured debt when you take out the loan, and provide the rest for the home improvements. The whole process of getting the loan was really easy, in my experience.”
Secured homeowner loans are also known as secured personal loans or second charge mortgages.
Unlike remortgaging, a secured homeowner loan runs alongside (but completely separate to) your current mortgage, and is secured against the equity you have in your property – which is the difference between the value of your property and the amount you still owe on your first mortgage.
Taking out a personal homeowner loan means you can keep your existing first mortgage deal – which could be particularly valuable if either interest rates have gone up or your credit rating has gone down. However, keep in mind that you’ll have two mortgages to pay off on the property instead of one, and both payments are equally as important.
Read our secured loans guide here.
A homeowner loan is secured against the property you live in which means your home will be used as collateral. Here at Together we can accept almost any type of property as security, whether you live in a house, a bungalow or a high-rise flat, and if it’s made of non-standard materials like concrete or timber.
During the application process we’ll ask you to provide us with certain documents so we can get to know you and understand the full picture. This includes your income and employment status, your credit circumstances, and any existing debts or expenses. This is to help us make sure you’ll be able to afford your monthly repayments without putting yourself under financial pressure.
Having these documents ready can help us keep things moving quickly and smoothly, and will mean we’re in the best position possible to approve your application.
You can find a list of the documents we may ask you to provide here.
