Homeowner borrowing and adverse credit
Secured loans with bad credit
If you own your home and need to borrow more, a poor credit history does not always rule out a secured loan. The important question is whether a second charge mortgage is affordable and better suited to you than the alternatives.
Count Ready is a credit broker, not a lender. An enquiry is not an application or an offer of credit. By Count Ready · Updated .
Your home may be repossessed if you do not keep up repayments on your mortgage.
Can you get a secured loan with bad credit?
Possibly. A lender may consider a homeowner with missed payments, defaults or other adverse credit, but it will also assess income, spending, existing mortgage payments, the property and the amount of equity. Security does not replace an affordability check.
On this page, a secured loan means additional borrowing secured on a home you own, usually as a second charge mortgage alongside your existing mortgage. A car loan or business asset loan is a different product and is outside this guide.
A second charge leaves the first mortgage in place and creates a separate loan and repayment. The first mortgage lender has priority over the sale proceeds if the property is sold. Both loans put your home at risk if payments are not maintained.
Compare the ways to raise money
There is no single cheapest route for every homeowner. Ask an adviser to compare the amount borrowed, monthly payment, total amount repaid, charges and what happens to your existing mortgage.
Second charge mortgage
A separate loan secured on your home. It may let you keep the rate on your first mortgage, but adds another payment and may cost more than other routes. Your credit history and affordability still matter.
Further advance
Extra borrowing from your current mortgage lender, if available and suitable. Ask about its rate, repayment term, checks and charges. This is different from moving the whole mortgage to another lender.
Remortgage to borrow more
Replacing your current mortgage may allow additional borrowing. Compare any early repayment charge and the cost of moving the existing balance to a new rate. Read the bad credit remortgage guide.
Unsecured borrowing or waiting
A suitable unsecured loan does not put your home up as security. It may be unavailable or more expensive for some applicants. If the spending can wait, reducing debt or saving could avoid new borrowing altogether.
What will a lender look at?
The lender will review the actual credit history, not simply the consumer score shown by an app. A recent missed mortgage payment may need a different discussion from an older settled default. There is no universal score, waiting period or loan-to-value limit that guarantees acceptance.
- Credit conduct: what happened, when, whether it is resolved and whether payments are currently maintained.
- Affordability: income, household spending, existing debts and the first mortgage payment as well as the proposed new payment.
- Property and equity: the property value, current mortgage balance and any other borrowing secured on it.
- Purpose and terms: what the funds are for, the proposed term and whether the total cost is reasonable for that purpose.
Start with your credit reports, recent bank statements, income evidence, current mortgage statement and a realistic budget. If information on your report looks wrong, raise it with the relevant credit reference agency and provider before applying.
How to get your UK credit reports · Bad credit mortgage advice
Costs and debt consolidation deserve care
A smaller monthly payment can result from a longer term, even when the total amount repaid rises. Compare the interest rate, repayment term, total amount payable and any lender, broker, valuation, legal or early repayment charges. If fees are added to a loan, interest may be charged on them too.
If you plan to clear credit cards or personal loans, you would be turning debt that was not secured on your home into debt that is. The FCA says advisers should consider the longer repayment period, whether securing the old debt is appropriate and, where payment difficulties are known, whether an arrangement with creditors would be more suitable.
Ask for a comparison that includes the old debts, the proposed new loan and what you would pay over the full term. A second charge should never be treated as a quick fix for an unaffordable budget.
See how clients describe Count Ready’s advice
A second charge can affect your home for years. Reviews can help you judge how clearly an adviser explains options and stays in touch through a decision. They cannot establish whether a lender will accept your application.
You can also check Count Ready’s company and regulatory details.
Questions about secured loans and bad credit
Do I need to own a home to use this kind of secured loan?
Yes. This guide concerns a second charge mortgage secured on a home you own with an existing mortgage. If you do not own a property, this is not the borrowing route described here. Other secured products are different and need their own assessment.
Will bad credit automatically stop a second charge mortgage?
No single credit score decides every case. A lender will look at the actual payment history, affordability, the property and equity, and its current criteria. Serious or recent problems may limit options or make borrowing unsuitable, so ask for an individual review before applying.
Could a secured loan reduce my monthly debt payments?
It could, especially if debts are spread over a longer term, but the total amount repaid may increase. You would also put your home at risk for debts that may previously have been unsecured. Compare the full costs and get free debt advice if existing payments are difficult to manage.
Is a second charge better than remortgaging?
It depends on your current mortgage rate, early repayment charge, credit history, the new borrowing and both options’ full costs. A second charge keeps your first mortgage in place; a remortgage replaces it. Compare both with any further advance before deciding.
Will a callback request affect my credit file?
Requesting a callback is an enquiry, not a loan application. Before any lender search or application, ask the adviser what information will be used and whether a proposed credit search is soft or hard. Do not assume all lenders use the same process.
Sources and limits. This is general UK information, not a lending decision or personal recommendation. Product availability, costs and acceptance depend on the lender and your circumstances. The explanation of second charges and debt-consolidation risks was checked against:
Talk through the borrowing before you apply
Tell Count Ready why you want to borrow, what has happened with your credit and when your current mortgage deal ends. An adviser can explain the information needed for a comparison and whether a second charge merits further consideration.
Do not include account numbers or confidential documents in the callback message.
What you can expect
No fee for the initial evaluation. Count Ready will explain any later broker fee before chargeable work. You can read the Terms of Business and Privacy Policy first.
An enquiry does not reserve a rate or guarantee a loan. If your payments are already under pressure, ask your existing lender and a free debt adviser for help promptly.
Your home may be repossessed if you do not keep up repayments on your mortgage.