TL;DR: A secured loan (also called a second charge mortgage or homeowner loan) lets you borrow against the equity in your home.
You can use the money for almost any legal purpose, including home improvements, debt consolidation, property investment, business funding, and more. Lenders are flexible on how the money is spent, but your home is at risk if you don’t keep up with repayments.
A mortgage broker can help you find the right deal and check whether a remortgage might suit you better.
If you need to borrow a substantial sum and you own your home, a secured loan is worth looking into. It lets you release some of the equity you’ve built up, without disturbing your existing mortgage.
Demand for these loans has grown sharply in recent years: according to the Finance and Leasing Association (FLA), over 41,700 second charge mortgages were agreed in 2025, totalling £2.14bn in new lending.
Most lenders are relaxed about what you do with the money, which makes it a flexible option for many situations.
That said, this type of borrowing puts your home at risk, so it’s worth understanding what you’re taking on before you apply. This guide explains how secured loans work, who can get one, and the most common reasons people use them.
What Is a Secured Loan?
A secured loan is a type of borrowing that is legally secured against your property. You might also hear it called a second charge mortgage, a homeowner loan, or a second mortgage. There’s no real difference between these terms; they all refer to the same thing.
How Mortgage Charges Work
Your main mortgage sits as a ‘first charge‘ on your property.
A secured loan takes a ‘second charge’, sitting behind it. If you ever defaulted on your debts and your home had to be sold, your main mortgage lender would be paid off first, with the secured loan lender taking what remained.
For example: you might have your main mortgage with Nationwide (first charge) and a secured loan with a specialist lender like Together or Shawbrook (second charge). You’d make separate monthly payments to each lender.
Having a separate arrangement is what makes secured loans genuinely useful. Because the loan is with a different lender, you don’t need to touch your existing mortgage deal.
That can save you real money if you’re locked into a good fixed rate with early repayment charges to consider. Where the loan is secured on your main home, it is regulated by the Financial Conduct Authority (FCA), giving you formal consumer protections throughout the process.
Who Can Get a Secured Loan?
Secured loans are only available to homeowners.
You don’t need to own your property outright, but you do need to have enough equity in it. Equity is simply the difference between your property’s value and the amount you owe on it.
What Do Lenders Check Before Approving a Secured Loan?
Lenders will check your income and outgoings to make sure the new monthly repayment is affordable. They’ll also assess your equity and calculate the combined loan to value (LTV) of your existing mortgage plus the new loan.
These loans are popular because secured lenders tend to be more flexible than high street banks.
Many will consider borrowers who’ve been turned down elsewhere, including those with some adverse credit history. Because the debt is secured against your home, the lender has more protection, which means they can often take a more lenient view of your credit file.
If you own rental properties, you may also be able to take a second charge against a buy-to-let rather than your main home.
If you’re not yet a homeowner, a secured loan won’t be available to you. Depending on what you need the money for, an unsecured personal loan may be an option, though the amounts available and the rates are less favourable.
What Can You Use a Secured Loan For?
Many high street lenders place restrictions on how you use their money. Secured loan lenders are much more flexible, and most will accept many different purposes.
Here are the most common uses.
Home Improvements
Home improvements are one of the most popular reasons people take a secured loan. Whether you want to add an extension, convert a loft, update a kitchen, or put in a new bathroom, a secured loan can give you access to the funds you need.
The scale of spending is significant: according to the 2025 UK Houzz and Home Study, the median renovation spend among UK homeowners reached £21,440 in 2024, a 26% rise on the year before, with the top 10% of renovating homeowners spending over £169,000.
This works well when the project is likely to add value to your home, since the money you borrow is being invested back into the very asset that secures it. Even where the work won’t add direct value, most lenders are happy to accept home improvement as a reason.
Debt Consolidation
If you’re carrying several high-interest debts, such as credit cards, store cards, or personal loans, rolling them into a single secured loan can reduce your monthly outgoings considerably.
It is, by some distance, the most common reason people take a second charge mortgage: FLA data for 2025 shows that 58.3% of all new second charge mortgage agreements were taken out solely to consolidate existing debt.
It’s worth being clear about the trade-off, though.
Your monthly payment may fall, but you’ll usually be spreading the debt over a longer term, which means paying more in total interest. You’re also converting unsecured debt into debt secured against your home. Talk it through with a broker before going ahead, so you understand the full cost over the loan term.
Property Investment
Some homeowners use a secured loan to raise a deposit for a second property, whether that’s a buy-to-let or a holiday let. Rather than waiting to save up, you can release equity from your existing home to fund the purchase.
For example, a homeowner with a property worth £600,000 and an outstanding mortgage of £200,000 has £400,000 in equity. Even after accounting for the lender’s LTV limits, there’s potentially a significant sum available to put towards a second property.
Business Purposes
If you run a business, a secured loan against your home can provide a source of capital that wouldn’t otherwise be available through standard business lending.
You could use it to cover cashflow shortfalls, fund stock purchases, invest in equipment, or even help buy out a business partner.
This can be a sensible route for business owners who have built up equity in their home but don’t have enough trading history or security to access commercial finance on its own.
Most lenders will want to understand how the money will be used and how the loan will be repaid. If the borrowing is for business purposes, be ready to explain your trading position and your plan for meeting the monthly repayments, as this will form part of the affordability assessment.
Major Life Events
Secured loans can also cover significant personal expenses. Some people use them to pay for a wedding, cover the costs of a divorce, help a family member financially, or fund a career break.
Others use them to meet an unexpected bill, such as a tax liability, legal costs, or urgent property repairs.
As long as the purpose is legal and the loan is affordable, most lenders will consider it. Bear in mind that personal expenditure of this kind won’t add to your property’s value, so think carefully about whether the borrowing makes financial sense over the longer term.
Buying Another Property Outright
If you have enough equity, it’s possible to use a secured loan to buy a property outright as a cash buyer.
This can be a practical approach if you want to move quickly, for instance at auction, or if the property you’re buying isn’t mortgageable in its current condition.
How Much Can You Borrow?
The amount available depends on three things: your income, your property’s value, and how much you already owe on it.
Secured lenders work to a maximum loan to value (LTV). This is the total amount of debt secured against your home, expressed as a percentage of its value. Most lenders will go to 85% or 90% LTV, though this depends on your income and credit profile.
Here’s a straightforward example:
| Property value | £600,000 |
| Outstanding mortgage | £220,000 |
| Equity | £380,000 |
| Current LTV | 37% |
| Lender’s maximum LTV | 90% |
| Maximum total borrowing (90% of £600,000) | £540,000 |
| Less existing mortgage | £220,000 |
| Maximum available to borrow | £320,000 |
Loan amounts generally start from around £10,000 and can go up to £1 million or more with specialist lenders.
To put this in context, the average second charge mortgage agreed in 2025 was around £51,000, according to Pepper Money’s analysis of FLA data, though individual loans vary significantly depending on equity and income. Repayment terms range from 5 to 35 years, though your age will affect what’s available to you.
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Should You Remortgage Instead of Taking a Secured Loan?
Before taking a secured loan, it’s worth checking whether a remortgage is possible. Remortgaging to release equity usually comes with lower interest rates than a second charge loan, and it simplifies your finances down to a single monthly payment.
The reason secured loans exist as an alternative is that remortgaging isn’t always the right answer.
If you’re tied into a fixed rate deal with high early repayment charges, breaking out of it could cost more than the savings you’d make on the rate. In that situation, a secured loan lets you borrow what you need without touching your main mortgage.
A good broker will look at both options and give you an honest view of which works out better for your circumstances.
A Word of Caution
A secured loan can be a sensible solution in the right circumstances, but it’s not without risk.
Your home is being used as security, which means it could be repossessed if you fall seriously behind on repayments. That’s a consequence worth taking seriously before you apply.
Taking a second charge also reduces your equity. This can affect your options when you come to move home, remortgage, or borrow again in the future. It’s worth thinking about how the loan fits into your wider financial picture before committing.
If you’re consolidating debts, the numbers often look attractive on paper. But compare the total cost of borrowing over the full term, not just the monthly payment. Spreading credit card debt over 20 years can dramatically increase what you pay overall, even at a lower monthly rate.
Working with a qualified mortgage broker is the best way to make sure you’re taking the right type of borrowing for your situation.
They can compare secured loans across a range of specialist lenders and help you understand the true cost of what’s available. If you have existing debt problems and are unsure whether more borrowing is the right step, free impartial advice is available from MoneyHelper (www.moneyhelper.org.uk), the government-backed guidance service.
Ready to Find Out More?
If you’d like to explore whether a secured loan is right for you, we can connect you with an independent mortgage broker who specialises in this area. They’ll review your circumstances, check what’s available, and give you straightforward advice with no obligation.
Frequently Asked Questions
A remortgage replaces your existing mortgage with a new one, often at a different rate or with a larger loan amount. A secured loan sits alongside your existing mortgage as a second charge. Remortgaging usually offers lower rates, but a secured loan can make more sense if you’d face high early repayment charges for leaving your current deal early.
Yes, debt consolidation is one of the most common uses for secured loans. Rolling multiple debts into one secured loan can reduce your monthly payments. Bear in mind that you’re converting unsecured debt into a loan secured against your home, and spreading it over a longer term will increase the total interest you pay.
Yes. Because the loan is secured against your property, your home could be repossessed if you consistently fail to keep up with repayments. This is why lenders carry out affordability checks carefully before any application is approved, and why it’s worth only borrowing what you genuinely need.
Many secured loan lenders will consider applicants with some adverse credit history, such as missed payments, defaults, or a CCJ. Because the debt is secured against your home, they have more protection than an unsecured lender would, so they can often be more flexible. A broker who knows this market will point you towards the right lenders.
Yes. Self-employed applicants are accepted by most secured loan lenders. You’ll usually need to provide at least two years of accounts or tax returns to demonstrate your income, though requirements vary by lender. A broker can help you find lenders who take a flexible view of self-employed income.
Yes, these terms refer to the same product. A second mortgage, a second charge mortgage, a homeowner loan, and a secured loan all describe borrowing that is secured against your property as a second legal charge, sitting behind your main mortgage lender.
