How Do Bad Credit Secured Loans Work?
1
Property provides security:
Your home acts as collateral, reducing lender risk despite poor credit.
2
Flexible credit assessment:
Lenders focus more on equity and affordability than credit scores.
3
Specialist underwriting:
Experienced teams assess applications individually, not just by computer scoring.
4
Competitive rates possible:
Rates often much lower than unsecured bad credit options.
5
Rebuilding opportunity:
Successful repayments help improve your credit score over time.
Bad Credit Secured Loan Options
| Credit Situation | Typical Rates | Maximum LTV | Lenders Available |
| Minor credit issues | 5.9%-12.9% | Up to 85% | Mainstream and specialist |
| CCJs/defaults | 7.9%-15.9% | Up to 80% | Specialist lenders |
| Missed payments | 8.9%-17.9% | Up to 75% | Specialist lenders |
| Debt management plans | 9.9%-18.9% | Up to 70% | Near-prime specialists |
| Previous bankruptcies | 10.9%-19.9% | Up to 65% | Adverse credit specialists |
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Credit Issues That Can Be Accepted
Recently Resolved:
- County Court Judgments (CCJs)
- Defaults on credit agreements
- Missed mortgage or loan payments
- Credit card payment problems
- Utility bill arrears
Historical Issues:
- Previous bankruptcies (discharged)
- Individual Voluntary Arrangements (completed)
- Debt Relief Orders
- Mortgage possession (previous)
- Business failures
Current Situations:
- Debt management plans
- Consolidating existing arrears
- Self-employed with limited credit history
- Recently divorced or separated
Bad Credit Secured Loan Example
| Feature | Details |
| Scenario: | £75,000 loan for debt consolidation |
| Applicant: | Homeowner with £15,000 CCJs and defaults |
| Property value: | £350,000 |
| Existing mortgage: | £180,000 |
| Available equity: | £170,000 |
| Loan offered: | £75,000 at 11.9% APR over 15 years |
| Monthly payment: | £875 |
| Previous unsecured debt payments: | £1,450+ per month |
| Monthly saving: | £575+ (£6,900 annually) |
Costs for Bad Credit Secured Loans
| Fee Type | Typical Range |
| Arrangement fee | 1-3% of loan amount |
| Higher lending charge | 0.5-2% for higher LTV loans |
| Valuation fee | £200-£800 (often free) |
| Legal fees | £400-£1,000 |
| Broker fee | 0.5-2% (if using broker) |
| Early repayment | 1-6 months interest |
Improving Your Chances of Approval
Before Applying:
- Check your credit report for errors and correct them
- Register on the electoral roll at your current address
- Pay down existing debts where possible
- Avoid making multiple credit applications
During Application:
- Provide complete and accurate information
- Explain any credit issues with supporting evidence
- Show stable income and employment
- Demonstrate how the loan will improve your situation
Bad Credit Secured Loans vs Alternatives
vs Guarantor Loans:
- No need to involve family/friends
- Higher borrowing amounts available
- Potentially lower interest rates
- Property at risk vs guarantor’s assets
vs Payday/Short-term Loans:
- Much lower interest rates
- Longer, manageable repayment terms
- Larger amounts available
- Longer application process
vs Credit Repair then Mainstream Borrowing:
- Immediate access to funds
- Opportunity to consolidate and improve credit
- Higher rates than prime lending
Unsure which Bad Credit Secured loan option is right for you?
If you’re unsure which Bad Credit Secured loan option is right for you – call today to speak with one of our loan experts or talk with us via our live advisor help chat.
To speak to a secured loan advisor call 0800 029 1671
Frequently Asked Questions about Bad Credit Secured Loans
Secured loan lenders can be very flexible – even bankruptcy may be acceptable if discharged and you have sufficient equity.
Initial searches may cause a small temporary dip, but successful loan management will improve your score over time.
Yes, though you’ll need to provide additional documentation like tax returns and bank statements.
Typically 3-6 weeks, though some specialist lenders can complete faster for urgent cases.
Key takeaways
- Property security makes lending possible even with serious credit problems
- Rates are higher than prime lending but much lower than unsecured bad credit options
- Successful repayments help rebuild your credit score for the future
- Specialist lenders understand complex situations and assess individually
Don’t Let Bad Credit Stop You
Speak to bad credit lending specialists — get expert assessment of your options despite past problems.
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