How secured loans work
A secured loan is backed by an asset, usually your home. Because the lender can recover the money from the asset, secured loans are often available for larger amounts and longer terms than unsecured personal loans.
Your home may be repossessed if you don't keep up repayments on a loan secured on it.
Worked example
Borrowing £30,000 at 8% over 10 years costs £363.98 a month, £43,677.93 in total. Over 20 years the payment falls to £250.93 a month, but the total rises to £60,223.68.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Secured or unsecured?
If you could borrow the amount unsecured, compare the two. A secured loan may have a lower rate, but spreading it over a long term can cost more overall, and your home is at risk if you can't pay.
Inputs for the secured loans calculator
Amount to borrow
The amount you want to borrow.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. Secured loans often run for longer than personal loans.
CALCULATOR QUESTIONS
Secured loans calculator questions
What is a secured loan?
A loan backed by an asset, usually your home, which the lender can claim if you don't repay.
Why choose a secured loan?
They can offer larger amounts, longer terms and sometimes lower rates than unsecured loans, but they put the asset at risk.
Does a longer term cost more?
Yes. In the example above, doubling the term from 10 to 20 years cuts the monthly payment but adds £16,545.75 in interest.
Can I lose my home?
Your home may be repossessed if you don't keep up repayments on a loan secured on it.