Best UK personal loans: cheapest rates, calculator and eligibility

Personal loans sit between credit cards and secured lending. They are unsecured, meaning no asset is pledged against the debt, but the lender still wants confidence the money will be repaid. That confidence is built from a credit search, income evidence and a check against existing commitments. The rate offered reflects how that picture looks on the day of application and changes between providers, between months, and between applicants who appear similar on paper.

This guide covers how much can typically be borrowed, what representative APR really means, who qualifies, how secured loans differ from unsecured, and when consolidating debt with a personal loan helps rather than hurts. It also walks through the application process from soft search to drawdown, what regulators expect, how to complain if something goes wrong, and the arithmetic behind how a monthly payment is calculated from the amount, the rate and the term.

The figures used throughout are illustrative. Rates change frequently and the only way to know the exact cost of a loan is to apply for a personalised quotation from a lender. The mechanics, the regulatory framework and the principles do not change at the same pace and form the substance of what follows.

How much can be borrowed with a personal loan

Most UK personal loans range from 1,000 pounds to 25,000 pounds, with some lenders offering up to 35,000 pounds or 50,000 pounds for established customers with strong credit profiles. The terms typically run from 12 months at the short end to 84 months (7 years) at the long end. A handful of lenders allow longer terms for home improvement loans, sometimes up to 10 years, though those products are less common.

The amount a particular applicant can borrow is rarely the same as the headline maximum. Lenders apply affordability rules drawn from the Financial Conduct Authority's consumer credit sourcebook (CONC), which requires a creditworthiness assessment that considers the risk to the lender and the affordability for the borrower. In practice that means looking at income, expenditure, existing debt commitments and the impact of the new repayment on disposable income.

The headline rate advertised by a lender (the representative APR) often applies to a specific loan size band, frequently 7,500 pounds to 15,000 pounds. Borrowing less than the lower end of that band, or more than the upper end, can result in a higher rate. This is sometimes called rate-for-band or tiered pricing, and it explains why a 5,000 pound loan can carry a higher APR than a 10,000 pound loan from the same provider.

Why the size of the loan changes the rate

The arithmetic is partly about operational cost. The fixed cost of underwriting a loan is the same whether the principal is 3,000 pounds or 13,000 pounds, so smaller loans need a higher interest rate to make the lending economic. It is partly also about risk: smaller loans are often associated with weaker affordability profiles, which lenders price for.

Personal loan rates and the difference between APR and representative APR

APR (Annual Percentage Rate) is the standardised cost of credit expressed as an annual percentage. It includes the interest rate and any compulsory fees, calculated on the assumption that the loan runs to its full term and is not repaid early. The calculation method is laid down in the Consumer Credit (Disclosure of Information) Regulations 2010 and is the same across all UK consumer credit providers, which is what makes it useful for comparison.

Representative APR is the rate advertised to attract customers. Under the Consumer Credit sourcebook in the FCA Handbook (CONC 3), a representative APR must be available to at least 51 percent of consumers who respond to the advertisement and are accepted for credit. The other 49 percent can be offered a higher rate, sometimes substantially higher, based on their individual credit assessment. The personalised APR (sometimes called the actual APR or risk-based APR) is the only figure that matters for a specific borrower.

That gap between representative and personalised is the single largest source of confusion in personal lending. An advert showing 6.9 percent representative APR does not mean every applicant gets 6.9 percent. Applicants with average credit profiles may be quoted 14.9 percent or 19.9 percent from the same lender. The only way to find out is to use a soft search eligibility checker (covered later) or to submit a full application.

Fixed versus variable rates

Most UK personal loans are fixed rate. The interest rate is set at drawdown and does not change for the life of the loan, regardless of what happens to the Bank of England base rate. The monthly payment is therefore predictable from day one.

Variable-rate personal loans exist but are rare in the UK retail market. Secured loans against a property are more often variable. Where a loan is fixed, an early repayment may still trigger a charge, capped under the Consumer Credit (Early Settlement) Regulations 2004 at no more than the lower of 58 days of interest or 1 month plus 28 days of interest depending on remaining term.

Who can get a personal loan

Eligibility decisions for personal loans rest on three pillars: identity, affordability and creditworthiness. The Financial Conduct Authority requires regulated consumer credit firms to make a reasonable assessment of whether a prospective borrower can afford the repayments without difficulty. The assessment must be proportionate to the amount and the borrower's circumstances.

The credit score the lender uses comes from one or more of the three main UK credit reference agencies: Experian, Equifax and TransUnion (formerly Callcredit). Each agency calculates a score using its own model, so the number quoted on a consumer-facing app is not what the lender sees. What the lender does see is the underlying file: account history, missed payments, defaults, county court judgments, bankruptcies, individual voluntary arrangements, electoral roll registration and the number of recent credit searches.

Income is verified directly from payslips, bank statements or open banking data, and increasingly via Bureau-supplied current account turnover information. Self-employed applicants typically provide two or three years of accounts or HMRC tax year overviews (SA302s). Lenders also assess existing debt commitments to calculate a debt-to-income ratio. A high ratio reduces the amount that can be borrowed even when the credit file is clean.

Common reasons applications are declined

Decline reasons cluster into a small set of categories. Insufficient income for the requested amount and term is the most common. A high level of existing unsecured debt is another. Missed payments, defaults or CCJs registered in the previous six years weigh heavily, with recent adverse data weighing more than older items. Not being on the electoral roll at the address given, or a thin file (very little credit history at all), can both lead to a decline even where the applicant has done nothing wrong.

Under the FCA's Consumer Duty, in force since 2023, lenders are required to act to deliver good outcomes for retail customers. A decline can sometimes be the right outcome where the loan would not be affordable. The Money Helper service, part of the statutory Money and Pensions Service, signposts free debt advice for borrowers in difficulty.

Secured vs unsecured loans

A standard personal loan is unsecured. The lender has no claim over a specific asset if the loan is not repaid. Recovery happens through default notices, collections, possible court action and, if a judgment is obtained and unpaid, attachment of earnings or other enforcement under civil procedure rules. The lender's losses, where they occur, are priced into the rate offered to all borrowers in that risk band.

A secured loan, sometimes called a homeowner loan or a second-charge mortgage when secured against residential property, is backed by an asset. If the borrower defaults, the lender can pursue the asset for recovery. Second-charge mortgages are regulated under the Mortgage Credit Directive and fall within the FCA's mortgage rules (MCOB), not the consumer credit rules (CONC) that apply to unsecured personal loans. The implications matter: advice requirements, affordability tests and complaint routes differ between the two.

Secured loans typically allow larger amounts (often 10,000 pounds to 100,000 pounds or more), longer terms (up to 25 or 30 years), and may be available where an unsecured application has been declined. The flip side is that the home is at risk if the loan is not repaid. Borrowers with adverse credit can sometimes get secured borrowing more easily than unsecured, but the security comes at a cost in both interest and risk.

When secured can be the wrong tool

Using a secured loan to consolidate short-term unsecured debt converts unsecured exposure into secured exposure. A defaulted credit card carries collections risk; a defaulted secured loan carries possession risk. The same arithmetic that makes consolidation arithmetically attractive (lower monthly payment, single creditor) can hide a meaningful increase in real-world risk.

Using a personal loan for debt consolidation

Debt consolidation means using a single new loan to repay multiple existing debts so that only one monthly payment is owed afterwards. The new loan can be unsecured (a standard personal loan) or secured (a homeowner loan or second-charge mortgage). The case for consolidation typically rests on three claims: lower total interest, lower monthly payment, and easier administration.

Lower total interest is only true if the rate on the new loan is meaningfully lower than the blended rate on the debts being repaid. A credit card running at 24.9 percent APR replaced with a personal loan at 9.9 percent APR can produce real savings. The same comparison done against a balance transfer card on a 0 percent promotional rate looks very different: the credit card is the cheaper option for as long as the balance is cleared before the promotion ends.

Lower monthly payment is almost always achievable by extending the term. A 6,000 pound credit card balance being repaid at 200 pounds a month can become a 6,000 pound personal loan over 5 years at 150 pounds a month. The monthly outflow falls; the total interest paid over the life of the debt can rise sharply because the principal is outstanding for longer. The Money and Pensions Service warns about this trade-off explicitly in its consolidation guidance through MoneyHelper.

When consolidation works

Consolidation tends to work where the borrower has a clear lump of existing debt at a high rate, a credit profile that qualifies for a meaningfully lower personal loan rate, the discipline not to run up new debt on the cards being cleared, and a term that does not extend the debt life by much. It also works as a simplification exercise where managing five direct debits across five lenders is itself causing missed payments.

When consolidation backfires

It backfires most predictably when the cards are cleared and then reused. The borrower then has the original cards filling up again, plus the consolidation loan to repay. It also backfires when the headline rate on the new loan is higher than expected once the personalised quote is given, when the term is extended too far, or when secured borrowing is taken on against a home for what should have been a short-term cash flow problem.

Banks, building societies and online lenders

The UK personal loan market has three broad provider categories. High-street banks (such as Barclays, HSBC, Lloyds Banking Group brands, NatWest Group brands and Santander UK) offer loans to current account customers and the wider market. Building societies (such as Nationwide, Yorkshire Building Society and Coventry Building Society) offer loans either branded under the parent or through subsidiary brands. Specialist consumer lenders and online lenders (such as Tesco Bank, Sainsbury's Bank, M&S Bank, AA, Hitachi Personal Finance, Zopa and others) operate primarily through digital channels.

The provider category does not on its own determine the rate. Bank-branded loans are often (though not always) cheaper for existing current account holders, because the bank already has a view of income, outgoings and credit risk through the account. Online lenders sometimes price more keenly at the lower-risk end of the market because their cost base is lower. Specialist lenders can be more flexible on credit profile but typically price higher to reflect the higher risk.

All UK consumer credit lenders must be authorised by the Financial Conduct Authority for the regulated activity of entering into a regulated credit agreement as lender. Authorisation can be checked on the FCA's Financial Services Register, which lists the firm reference number, permissions and any restrictions. A lender that does not appear on the Register, or appears with permissions that do not cover consumer credit, should not be lending.

Brokers and direct application

A credit broker is an intermediary that introduces borrowers to lenders. Brokers must also be FCA-authorised, with permissions for credit broking. A broker can quote multiple lenders in a single application and can sometimes find a rate where a single bank cannot. Brokers may charge a fee, which under FCA rules must be disclosed before any agreement is signed. Direct application to a single lender avoids any broker fee but limits the search to that lender's product set.

The application process and what affects approval

A standard application has six steps: eligibility check, full application, credit search, decision, documentation and drawdown. The eligibility check uses a soft search of the credit file that is visible to the applicant but not to other lenders. Most major lenders and aggregator-free comparison points support this step. A soft search returns either a likely accepted decision with an indicative rate, a possibly accepted result, or a likely declined result.

The full application is submitted once an eligibility check looks positive (or directly, if the applicant is willing to risk a hard search). It collects full personal details, residential history, income evidence, employment status and the loan terms requested. The lender then runs a hard credit search, which leaves a footprint visible to other lenders for around 12 months and is one factor in their own scoring. Multiple hard searches in a short period can themselves lower a credit score.

The decision usually comes back within minutes for straightforward profiles, or hours to a few days where manual underwriting is needed. Documentation may include uploading payslips, bank statements or providing open banking access, depending on the lender. Drawdown (the money arriving in the account) typically happens within 1 to 5 working days of the agreement being signed.

The 14-day right to withdraw

Under the Consumer Credit Act 1974 and the Consumer Credit Directive, a borrower has 14 calendar days to withdraw from a regulated personal loan agreement, starting the day after the agreement is made or the day the borrower receives a copy of the agreement (whichever is later). Withdrawal requires repaying the principal drawn plus interest accrued up to the date of repayment. No further charge applies and the agreement is unwound. Early settlement after the 14-day period is also permitted under separate early settlement rules, with the rebate of future interest calculated under the 2004 regulations.

What changes the personalised APR

Within a single lender's pricing, the personalised APR moves on a small set of inputs: credit score band (often expressed internally as A1 through D4 or similar), debt-to-income ratio, loan amount, loan term, residential status (homeowner versus renter) and time at current address and employer. The same applicant applying for a 10,000 pound loan over 5 years and an 8,000 pound loan over 4 years from the same lender on the same day will often see different personalised APRs.

When a personal loan beats a credit card or 0 percent finance

The comparison between a personal loan and a credit card is not really about the rate alone; it is about three things together: certainty, discipline and total cost. A personal loan locks in a fixed rate, a fixed monthly payment and a fixed end date. The borrower knows on day one what the debt will cost in total and when it will be cleared. A credit card offers flexibility (minimum payments, ability to overpay, redraw within the limit) at the cost of discipline: minimum payments alone can leave a balance running for many years.

A 0 percent purchase or balance transfer credit card offer can be cheaper than any personal loan, but only if the balance is cleared (or transferred again) before the 0 percent period ends. After that period, the standard purchase APR applies, which on most UK cards is in the 22 percent to 29 percent range. A borrower who is confident about clearing the balance inside the promotional window may pay less with a card. A borrower who is not confident is taking on the risk of revert-rate interest at far above any personal loan rate.

0 percent retailer finance (often arranged through a specialist consumer lender on items such as furniture or electronics) carries its own trade-off. The 0 percent rate is genuine for the promotional period, but missing a payment can trigger interest backdated to the start of the agreement at a rate often above 19.9 percent APR. The cleanest comparison is total expected cost given the borrower's likely repayment pattern.

How a monthly payment is calculated: a worked example

The monthly payment on a personal loan is derived from three inputs: the loan amount (principal), the monthly interest rate (annual rate divided by 12), and the number of monthly payments (term in months). The standard amortising loan formula is:

M = P x (r x (1 + r)^n) / ((1 + r)^n - 1)

Where M is the monthly payment, P is the principal, r is the monthly interest rate (as a decimal) and n is the number of monthly payments. Worked example: a 10,000 pound loan at 7.9 percent APR (representative) over 5 years (60 months). The monthly rate r is 0.079 / 12, which is 0.006583. The number of payments n is 60. Plugging into the formula gives a monthly payment of approximately 202.18 pounds. Over 60 months the total repaid is approximately 12,130.80 pounds, meaning around 2,130.80 pounds of interest on the 10,000 pounds borrowed. The exact figure varies a little with how the lender treats the first payment date and any early settlement rules, but this is the underlying arithmetic.

Stretching the same loan to 7 years (84 months) at the same rate reduces the monthly payment to around 155.49 pounds but increases total interest paid to around 3,061 pounds. The reduction in monthly outflow comes at a cost in total interest paid; this is the structural reason consolidation can lower monthly payments while increasing lifetime cost. The Money Helper free loan calculator at MoneyHelper.org.uk replicates this arithmetic for any amount, rate and term.

Regulation, complaints and the safety net

UK personal loans are consumer credit. The relevant regulatory framework has three layers. The primary statute is the Consumer Credit Act 1974, supplemented by the Consumer Credit Directive (2008/48/EC), and incorporated into UK law after EU exit. The conduct rules are set out in the Financial Conduct Authority's Consumer Credit sourcebook (CONC), which covers pre-contract information, creditworthiness assessment, advertising, default treatment and arrears handling. The Consumer Duty (PRIN 2A in the FCA Handbook) sits over all retail consumer credit activity since 2023.

A complaint about a regulated lender starts with the firm. The lender has up to 8 weeks to provide a final response under DISP 1 of the FCA Handbook. If the borrower is dissatisfied with the response, or no response arrives within 8 weeks, the complaint can be referred to the Financial Ombudsman Service (FOS). The FOS is a statutory dispute resolution service set up under the Financial Services and Markets Act 2000. It is free to use for eligible complainants (most consumers and small businesses) and its decisions are binding on the firm if the consumer accepts them.

Compensation in the event of lender insolvency is more limited than for deposits. The Financial Services Compensation Scheme protects savings up to a per-person, per-firm limit but does not generally provide cover for personal loan products in the same way. A lender's insolvency does not extinguish the borrower's debt; the loan book is typically sold to a successor and the borrower owes the new owner instead. Section 75 of the Consumer Credit Act 1974 provides a separate protection where credit (including some personal loans linked to specific purchases) is used to buy something between 100 pounds and 30,000 pounds and the supplier fails to deliver or the goods are faulty.

How we verified this

The rules on creditworthiness assessment, representative APR thresholds and pre-contract information come from the FCA Consumer Credit sourcebook (CONC), particularly CONC 3 (financial promotions and communications) and CONC 5 (responsible lending). The 14-day withdrawal right and early settlement mechanism come from the Consumer Credit Act 1974 as amended, the Consumer Credit (Disclosure of Information) Regulations 2010 and the Consumer Credit (Early Settlement) Regulations 2004, all available on legislation.gov.uk. Complaint handling rules are drawn from DISP 1 in the FCA Handbook and the Financial Ombudsman Service's published procedures. Section 75 protections are taken from sections 75 and 75A of the Consumer Credit Act 1974. Debt consolidation cautions and the MoneyHelper loan calculator reference the Money and Pensions Service's published guidance. Lender authorisation can be checked on the FCA's Financial Services Register. Rates and product features were treated as illustrative because they change frequently across the market.

Frequently asked questions

What is the difference between representative APR and personalised APR?

Representative APR is the rate advertised by a lender and must be available to at least 51 percent of accepted applicants. Personalised APR is the actual rate offered to a specific applicant after a credit search. The two can be the same, but for many applicants the personalised rate is higher than the headline figure.

How much can a UK personal loan be for?

Most UK personal loans run from 1,000 pounds to 25,000 pounds, with some lenders offering up to 35,000 pounds or 50,000 pounds. The amount any individual applicant can borrow depends on income, existing debt and credit history. The advertised maximum is rarely available to all applicants.

How long can a personal loan run for?

Terms typically range from 12 months to 84 months (7 years). Some home improvement loans run longer. A longer term reduces the monthly payment but increases the total interest paid over the life of the loan.

Does applying for a personal loan damage a credit score?

A soft search eligibility check does not affect the credit score and is not visible to other lenders. A full application triggers a hard search, which is visible for around 12 months and can have a small short-term impact on the score. Multiple hard searches in a short period can have a larger effect.

What is a soft search?

A soft search is a record on the credit file visible only to the person being searched, not to other lenders. It does not affect the score. Most UK lenders allow a soft search to indicate the likely outcome of a full application and the indicative rate, without committing to a hard search.

Are personal loan rates fixed or variable?

Most UK personal loans are fixed rate, meaning the interest rate and monthly payment do not change for the life of the loan. Variable-rate personal loans exist but are uncommon. Secured loans against a property are more often variable.

What credit score is needed for the best personal loan rates?

There is no single industry credit score; each credit reference agency uses its own model. Generally, applicants with a long unblemished credit history, low existing debt, stable income and homeowner status are quoted the keenest rates. The only reliable way to see what an individual will be offered is to run a soft search with the lender.

Can a personal loan be repaid early?

Yes. The Consumer Credit Act and the Consumer Credit (Early Settlement) Regulations 2004 give borrowers the right to settle early. A small early settlement charge may apply, capped at the lower of 58 days or 1 month plus 28 days of interest depending on the term remaining. Any future interest is rebated.

What is the 14-day cooling-off period?

For regulated personal loans, the borrower has 14 calendar days from drawing down the loan to withdraw from the agreement. The principal plus interest accrued must be repaid, but no other charges apply. This is a statutory right under the Consumer Credit Act.

What happens if a personal loan payment is missed?

The lender will usually contact the borrower to collect the missed payment. A formal default notice can be issued if arrears persist, typically after a payment is two months overdue. Missed payments and defaults are reported to credit reference agencies and remain on the credit file for six years. Early contact with the lender is the way to avoid escalation.

Can a personal loan be used for any purpose?

Most lenders allow a personal loan to be used for most purposes including home improvement, car purchase, debt consolidation or major life events. Some uses are typically excluded by lender terms, including business purposes, gambling, or paying off other unsecured debt with the same lender. The lender's terms set out the permitted uses.

Is a personal loan cheaper than a credit card?

Often yes, but not always. A typical personal loan rate is lower than a standard credit card purchase rate. A 0 percent purchase or balance transfer card can be cheaper than any personal loan, provided the balance is cleared inside the promotional period. The comparison depends on the borrower's likely repayment pattern.

What is the difference between a secured loan and an unsecured personal loan?

A secured loan is backed by an asset, usually a home, and the lender can pursue that asset if the loan is not repaid. An unsecured personal loan is not backed by an asset; recovery is through collections and the courts. Secured loans typically allow larger amounts and longer terms but put the asset at risk.

Does consolidating debt with a personal loan always save money?

No. Consolidation saves money only if the new rate is meaningfully lower than the blended rate on the debts being repaid, and the term is not extended too far. Extending the term reduces the monthly payment but can increase the total interest paid. MoneyHelper provides a free consolidation calculator.

Can a self-employed person get a personal loan?

Yes. Lenders typically ask for two or three years of accounts, HMRC tax year overviews (SA302s) or business bank statements. Affordability is assessed on net profit rather than turnover. Some lenders also use open banking to verify income from business and personal accounts.

What happens if a personal loan lender goes bust?

The loan does not disappear. The lender's loan book is typically sold to another regulated firm, which takes over administration and collection. The borrower owes the new owner the same balance on the same terms. The Financial Services Compensation Scheme covers deposits, not most personal loans, in the event of insolvency.

Who regulates UK personal loans?

The Financial Conduct Authority regulates UK consumer credit, including personal loans. Lenders and brokers must be authorised and listed on the Financial Services Register. The Consumer Credit Act 1974 sets the underlying statutory framework, and the FCA Consumer Credit sourcebook (CONC) sets the conduct rules.

How do I check if a personal loan lender is authorised?

The Financial Services Register at register.fca.org.uk lists every authorised firm with its firm reference number, permissions and any restrictions. A lender for personal loans should have permission to enter into a regulated credit agreement as lender. Unauthorised lenders should be reported to the FCA.

How do I complain about a personal loan provider?

The first step is to complain to the lender directly. The lender has up to 8 weeks to give a final response. If the complaint is not resolved within 8 weeks or the response is unsatisfactory, the complaint can be referred to the Financial Ombudsman Service, which is free to use and binding on the firm if the consumer accepts the decision.

What is Section 75 protection?

Section 75 of the Consumer Credit Act 1974 makes the lender jointly liable with the supplier where credit between 100 pounds and 30,000 pounds is used to buy something and the supplier fails to deliver or the goods are faulty. The protection applies to credit cards and some linked personal loans, but not usually to standard personal loans paid into a bank account.

Will a joint personal loan affect both applicants' credit files?

Yes. A joint personal loan creates a financial association on both credit files. Both parties are jointly and severally liable, meaning either can be pursued for the full balance. Missed payments are recorded on both files. Closing the loan does not automatically remove the financial association.

Can a personal loan be taken out at any age?

The minimum age is 18. Most lenders have a maximum age at the end of the term, often 70 or 75, but this varies. Income must be evidenced regardless of age. Pension income is normally accepted alongside or in place of employment income.

What documents are needed to apply for a personal loan?

Lenders typically require proof of identity (passport or driving licence), proof of address (recent utility bill or bank statement), recent payslips or business accounts, and bank statements covering the past three months. Open banking access can replace some of these documents. The exact list depends on the lender.

Can a personal loan be transferred to another person?

No. A personal loan is a personal liability and cannot be transferred to a different borrower. The original borrower remains liable for repayment. A new loan can be taken out by another person, with the funds used to repay the original loan, but this is a fresh application with its own credit decision.

What is debt-to-income ratio and why does it matter?

Debt-to-income ratio is the proportion of monthly gross income committed to debt repayments. Lenders use it to assess affordability. A ratio above 40 percent typically restricts borrowing capacity. Some lenders calculate it as monthly repayments divided by net (take-home) income rather than gross.

Do personal loans require a guarantor?

Standard personal loans do not require a guarantor. Guarantor loans are a separate product category, where a third party agrees to repay the loan if the primary borrower defaults. They are typically used by borrowers with thin or impaired credit files and carry higher interest rates than standard personal loans.

What is the typical interest rate range on UK personal loans?

Rates vary widely across the market and the credit risk spectrum. Headline representative APRs at the lower end of the market are typically in single digits for the keenest tiers, and rise into the 20s or higher for borrowers with weaker credit profiles. Specific rates change frequently and depend on amount, term and the applicant.

Can a personal loan be topped up?

Some lenders allow an existing personal loan to be increased by a top-up rather than a new application. The new total is treated as a fresh underwriting decision. Other lenders require the existing loan to be settled and a new loan opened for the higher amount. Terms vary by lender.

How quickly is a personal loan paid out?

Once the agreement is signed, drawdown typically happens within 1 to 5 working days. Same-day payout is offered by some lenders to existing current account customers. The exact timing depends on the lender, the time of day the agreement is signed and the receiving bank's processing window.

Does a personal loan affect a future mortgage application?

Yes. A personal loan appears on the credit file and is treated as a committed monthly outgoing in mortgage affordability assessments. The presence of a loan does not block a mortgage but it reduces the amount that can be borrowed against income. Repaying the loan before applying for a mortgage can increase the mortgage borrowing capacity.