TL;DR
A secured loan uses your home as collateral. Failure to repay can result in repossession even if your mortgage is up to date
Last reviewed: June 2026 | Sources: Debt & Credit
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Debt & Credit Key Facts: Secured Loans Security: your homeRanks: behind first mortgageFCA regulated: since 2016Rate vs mortgage: typically higherRegulator: FCA |
What a secured loan is
A secured loan, also known as a second charge mortgage or homeowner loan, uses your property as security for the borrowing. It ranks behind your existing mortgage on the property. If you fail to repay, the lender can seek possession of your home even if your first mortgage is fully up to date, as the secured loan is a separate obligation with a separate charge.
The risks most people do not check
Your home is at risk independently of your mortgage. The secured loan lender has a separate legal charge over your property. Defaulting on the secured loan while maintaining mortgage payments does not protect your home from the secured loan lender's possession action.
A further advance from your mortgage lender may be cheaper. If your existing mortgage lender offers a further advance at a competitive rate, this is typically cheaper than a separate secured loan from another lender, avoids broker fees and is simpler to manage. Always compare before approaching a secured loan broker.
Broker market conflicts are significant. Secured loans are sold predominantly through brokers paid by commission. The market has historically attracted complaints about unsuitable advice and high-pressure selling. Verify FCA authorisation and whole-of-market status.
Total debt on your home increases. Adding a secured loan reduces your equity and increases total secured debt, affecting future remortgaging options and the net proceeds of any property sale.
What to verify before proceeding
Obtain a further advance quote from your existing mortgage lender first. Compare the total cost of credit on the secured loan against remortgaging to a larger amount. Verify FCA registration of any broker. Calculate the impact on total secured debt and LTV.
Where to complain
Secured loans regulated under MCOB since March 2016. Complaints about unsuitable advice go to the Financial Ombudsman Service.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Always verify current terms with relevant providers and seek regulated advice for your specific circumstances. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
What is the difference between a secured loan and a second charge mortgage?
They are the same product. Second charge mortgage is the regulatory term used since FCA regulation brought them under mortgage conduct of business rules in 2016.
Can I get a secured loan if I am in negative equity?
No. Secured loan lenders require equity in the property. The combined LTV of the first mortgage and secured loan must be within the lender's criteria.
Does my mortgage lender need to consent to a secured loan?
Yes. Most first charge mortgages require the lender's consent before a second charge can be registered. The first charge lender may refuse or impose conditions.
Are secured loan interest rates fixed or variable?
Both fixed and variable rate secured loans are available. Fixed rates provide payment certainty; variable rates may be lower initially but carry rate rise risk. The choice depends on your risk tolerance and the available rate differential.
What happens to the secured loan if I sell my home?
Both the first mortgage and the secured loan are repaid from the sale proceeds. If sale proceeds are insufficient to cover both, you remain liable for the shortfall.
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Sources FCA: Second Charge Mortgages |
