Borrowing against your savings
Some lenders will lend against money you hold in fixed-term savings, holding the savings as security. Not every UK bank or building society offers this, and some fixed-rate savings products cannot be borrowed against, so check with your provider first. If the savings stay in place they carry on earning their rate while the loan runs.
The loan rate is normally the savings rate plus a margin set by the lender, and the loan cannot run longer than the savings are fixed for. As the savings keep earning, the real extra cost of borrowing is the part of the loan interest above the savings rate. The calculator shows that as well as the total interest.
The limit, the margin and the rates are each lender's own, so you enter them from the offer. Interest is worked out as the yearly rate divided by 12 each month, with no APR conversion.
Worked example
£10,000 in savings at 4% a year with interest added yearly grows to £10,816.00 over 2 years, earning £816.00. If a lender lends up to 90%, you could borrow up to £9,000.00.
Borrowing £9,000 for 12 months at 2 points above the savings rate, which is 6.00% a year, and repaying in equal monthly instalments, costs £774.60 a month and £295.17 in interest. Of that, £98.39 is above the 4% the savings earn.
Paying interest only instead costs £45.00 a month and £540.00 in interest, with the £9,000 repaid at the end. A loan of £9,500 would be £500.00 above the 90% limit.
For loans secured on a home rather than savings, see the secured loans calculator.
Things to check
Ask whether your savings can be pledged at all, how much the lender lends, the margin, whether the loan is interest only, and what happens to the savings if you do not repay. A cheaper option can be to compare the loan with simply using other savings or a personal loan.
The fixed deposit loan calculator is the global version of this page, in rupees by default.
Inputs for the savings secured loan calculator
Amount in the fixed-term savings
The amount you hold that you would pledge as security for the loan.
Rate the savings earns (per year)
The yearly rate on the savings. The rate shown is only an example.
Interest on the deposit is added
How often the savings' interest is added: yearly, half-yearly, quarterly or monthly.
Time left on the savings
The loan cannot run longer than this. Months are fine, for example 2.5 years.
Most the lender lends against it
The share of the savings the lender allows you to borrow. Use the lender's figure.
Points the loan costs above the deposit rate
The loan rate is the savings rate plus this margin. Use the lender's figure.
Loan you want
The amount you want to borrow against the savings.
Loan term
The months you will borrow for, up to the time left on the savings.
Loan is repaid
Interest only with the loan at the end, or in equal monthly instalments.
CALCULATOR QUESTIONS
Savings secured loan calculator questions
Can I borrow against fixed-term savings in the UK?
Some lenders allow it, but not all do, and some fixed-rate savings cannot be borrowed against. Ask your provider.
Do my savings keep earning interest?
Usually yes while they are pledged, but check the terms. The calculator assumes they do.
What is the real cost of the loan?
The part of the loan interest above the rate your savings earn, because the savings' own interest continues.
Is the rate an APR?
No. The calculator uses the yearly rate divided by 12 each month. Check your lender's APR for the cost including fees.