Comparing UK secured loans properly means looking past the headline interest rate to the four numbers that actually determine total cost: APRC (Annual Percentage Rate of Charge), arrangement and broker fees, early repayment charges, and the lender's actual willingness to approve your specific case. The cheapest advertised product often isn't the cheapest available to a real borrower, and certainly isn't always the one that approves the application. This guide walks through how to compare secured loans in 2026 across all four dimensions.
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TL;DR Compare APRC, not headline rate. Headline rate ignores fees; APRC includes them. Calculate total amount payable over your realistic holding period. Lifetime cost is misleading if you'll refinance in 3 years. Always check ERC structure. A 5-year ERC locks you in even if rates fall. Verify lender criteria fit before applying. A great rate is irrelevant if the lender will decline your case. |
The four numbers that decide which secured loan is cheapest
| Number | What it captures | Where to find it |
|---|---|---|
| APRC (Annual Percentage Rate of Charge) | Total cost expressed as an annual rate, including fees | Mandatory on every regulated illustration; FCA-defined under MCOB 10A |
| Total amount payable over the term | Sum of all monthly payments plus fees over the full loan term | Mandatory on the illustration document |
| Early repayment charge structure | How much it costs to settle the loan early in years 1-5 | Disclosed in the offer document; often a percentage scale falling each year |
| Total cost over your realistic holding period | What you'll actually pay if you remortgage or sell before the term ends | Calculate yourself: monthly payments to that point, plus ERC at that point, plus settlement admin fees |
Why headline rate is misleading
The advertised "from" rate on a UK secured loan rarely applies to most borrowers. Headline rates assume a specific combination: low combined LTV (often 60% or lower), clean credit profile, employed income, and standard freehold property. Most borrowers don't fit this profile exactly and are quoted a different rate.
Even when the headline rate is what you're offered, it doesn't include arrangement fees, broker fees, valuation fees, or product fees. A loan with a headline 0.5% rate advantage but a £2,500 arrangement fee added to the loan can easily cost more in total than a "higher rate" product with no arrangement fee.
What APRC includes (and doesn't)
APRC is regulated by the FCA's MCOB 10A. The calculation is standardised across all regulated UK secured loans, so two illustrations from different lenders are directly comparable on APRC.
| Included in APRC | Not included in APRC |
|---|---|
| Interest charged over the term | Insurance you choose to add (life cover, payment protection) |
| Lender arrangement fee | Fees for breaking your existing first-charge mortgage early |
| Mandatory valuation fees | Future ERCs if you remortgage early |
| Mandatory legal fees | HMRC tax payable on any related transactions |
| HM Land Registry charge registration fee | Optional services (rate switch fees, statement reissue fees) |
This means APRC is the right comparison for the cost of taking the loan, but you still need to layer on ERCs and any first-charge break costs to compare scenarios where you might refinance early.
How to compare across realistic holding periods
Most UK borrowers don't hold a secured loan for the full term. They refinance, remortgage to consolidate, or sell the property within 5-10 years. Comparing on lifetime APRC alone undervalues products with low ERCs and short fixed periods.
A better comparison: pick the holding period most likely for your case (often 3, 5, or 7 years) and calculate total cost over that horizon for each shortlisted product. The components are:
- Monthly payments × months held.
- Plus any ERC payable at the exit point.
- Plus settlement administration fee.
- Minus the loan balance still outstanding (which you'll repay through whatever exit route).
Run this for each product. The product with the lowest total cost over your realistic holding period is the cheapest for your case, regardless of which has the lowest headline rate or lifetime APRC.
Comparing fixed-rate vs variable-rate secured loans
| Dimension | Fixed rate | Variable rate (often tracker or discount) |
|---|---|---|
| Headline rate | Higher; includes the lender's risk premium for rate certainty | Lower at outset; floats with the lender's variable rate or Bank Rate |
| Payment certainty | Fixed for the product period (typically 2-5 years) | Payments rise and fall with rate movements |
| ERC during fixed period | Standard ERC scale | Often lower or no ERC outside any introductory tracker discount period |
| What happens at end of fixed period | Reverts to lender's standard variable rate (SVR), usually higher | Continues on variable; SVR or tracker depending on product |
| Best for | Borrowers prioritising payment certainty over outright lowest cost | Borrowers with capacity to absorb rate rises and willingness to refinance |
How brokers and comparison sites differ
| Channel | What you get | Watch out for |
|---|---|---|
| Comparison websites | Wide rate visibility; quick filtering by loan size and term | May show only commercial-partner lenders; can't assess criteria fit; rates may be theoretical |
| Lender direct | Direct application; no broker fee; access to lender-specific direct rates | One lender's view only; if declined, you've used a credit footprint |
| Whole-of-market broker | Soft-search DIPs across multiple lenders; criteria knowledge; case packaging | Broker fee applies; quality varies between firms |
| Panel broker | Searches a defined panel; faster decisioning; FCA-required to disclose panel | May miss the best lender for unusual cases |
What to ask any lender or broker before committing
- What is the APRC, in writing, on the actual product I'm being offered (not the headline)?
- What is the total amount payable over the full term and over my likely holding period?
- What's the ERC structure: percentages and years?
- Are there any product fees, arrangement fees, or broker fees not included in the APRC?
- What's the SVR or follow-on rate after any fixed period ends?
- Is the loan portable if I move house?
- What's the lender's typical completion time for cases like mine?
- Is the loan rate offered conditional on the valuation, the credit search, or anything else that could change at offer stage?
Comparing secured loans against alternatives
Before settling on a secured loan, compare against the realistic alternatives. The Money and Pensions Service publishes free guidance on these at moneyhelper.org.uk.
| Alternative | When it's cheaper than a secured loan | When a secured loan is cheaper |
|---|---|---|
| Unsecured personal loan | Smaller amounts (under £25,000), short terms (1-7 years), clean credit | Larger amounts, longer terms, lower rate available secured |
| Remortgage with capital raise | Near end of fixed period; mainstream rates available; full remortgage worthwhile | Tied into low fixed rate with high ERC; consolidation loses you the rate |
| Further advance from current lender | Existing lender's product range competitive; clean credit; small capital raise | Existing lender's rates uncompetitive; need amount or term beyond their range |
| Equity release (over 55) | You don't want to make monthly payments; long horizon; happy with interest roll-up | You can afford monthly payments; cheaper over the term |
Risks of picking purely on rate
- Lowest-rate products often have narrow eligibility; you may be declined and have to start again.
- Lowest-rate products often have the longest ERC period, locking you in if rates fall.
- Lowest-rate products often have the highest arrangement fees, raising APRC.
- Very low rates may be variable or trackers, exposing you to rate rises.
- Comparison-site rates may not be available to your specific case profile.
Always insist on a written illustration with APRC, total amount payable, and ERC structure before committing. The illustration is mandatory under MCOB rules.
Primary sources
- FCA Mortgage Conduct of Business handbook, MCOB 10A: handbook.fca.org.uk/handbook/MCOB/10A/
- FCA Register: register.fca.org.uk
- MoneyHelper: moneyhelper.org.uk
- Financial Ombudsman Service: financial-ombudsman.org.uk
- Financial Services Compensation Scheme: fscs.org.uk
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Disclaimer: This article is editorial information only and does not constitute financial advice or a recommendation of any specific product or lender. Secured loans are regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Always consult an FCA-authorised mortgage broker or adviser for personalised guidance, and verify lender details on the FCA Register before making any decision. |
Frequently asked questions
What's the difference between APR and APRC?
APRC (Annual Percentage Rate of Charge) is the figure regulated by the FCA for mortgages and second-charge mortgages. APR (Annual Percentage Rate) is the corresponding figure for unsecured consumer credit under the Consumer Credit Act. Both express total cost as an annual rate, but APRC is the relevant one for UK secured loans.
Why do secured loan rates vary so much between lenders?
Lenders price for the risk profile they target. Mainstream lenders priced for clean-credit, low-LTV cases offer the lowest rates but decline most non-standard cases. Specialist lenders accept wider profiles at higher rates. The same case will see materially different rates across lender types.
Should I prioritise the lowest rate or the lowest fees?
Neither in isolation. Compare APRC, which combines both. Then compare total amount payable over your realistic holding period, which factors in ERCs.
Can I negotiate a secured loan rate?
Limited scope on the rate itself, since lenders publish criteria-driven product cards. More scope on broker fee (negotiable in many cases), arrangement fee (sometimes waivable), and term (changing the term affects monthly payment significantly).
How often do UK secured loan rates change?
Lenders refresh product cards every 2-8 weeks on average, more often during periods of Bank Rate movement. A rate quoted today may not be available next month. The illustration document is binding for the period stated on it (usually 30 days).
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FIND AN FCA-AUTHORISED SECURED LOAN BROKER Comparison sites show theoretical rates; brokers verify whether those rates apply to your case. A whole-of-market broker compares APRC across lenders that will actually approve. The KFI directory lists FCA-authorised mortgage brokers across the UK, filterable by region and specialism. All firms shown are verified against the FCA Register at the time of listing. |