£60,000 loan guide: How to borrow £60k | Aro (2024)

If you want to borrow £60k, you will most likely be looking at taking out a secured loan.

Secured loans, also known as homeowner loans, allow you to borrow higher amounts by securing the debt against your property. As a result, lenders are more comfortable offering higher amounts and are less dependent on your credit score to determine your eligibility.

While other types of loan—like unsecured personal loans—exist, they are intended for smaller amounts and limit the amount you can borrow, typically at around £35,000.

As an alternative to a secured loan, you could also consider remortgaging to release the equity in your property. If you’re in the middle of a fixed-rate term however, you may be required to pay early repayment charges.

Your home may be repossessed if you fail to keep up repayments on a secured loan or your mortgage.

Your eligibility to borrow will vary between lenders, each with their own unique criteria. Generally speaking, however, they will look at the following when considering a secured loan application:

• The equity in your home (the amount of your property that you own)
• The amount requested
• Your income
• Your borrowing history
• Your debt-to-income ratio (how much of your income you currently pay towards debts)

The amount of equity you have in your home will often be a significant factor for secured loan eligibility. This is essentially the amount of your property’s value that you have paid-off, so will often include the mortgage repayments you have made to-date and the original deposit you put down.

Your credit score is a representation of your borrowing history, used by lenders to determine how reliable you are at repaying money you have borrowed.

A high credit score will often be a sign that you have a strong history of regular borrowing, through a variety of means, with on-time repayments.

A lower credit score may be a sign of missed or late repayments on previous debts, or it could simply be the case that there isn’t much borrowing history to evaluate.

In either case, because secured loans use the equity in your home to determine eligibility, your credit score will have less of an impact on your approval chances. Having said that, a high credit score may still help you to get more favourable rates.

It’s easy to find and apply for a loan online.

With our free tools, you can check your eligibility and start browsing lenders in just a few clicks. Simply provide some basic details about yourself and what you are looking for, and we’ll run a quick soft search to start suggesting lenders that suit your needs.

You can then browse these lenders and, if you find one that feels like a good fit, make your application.

Once you click to apply for a loan, the lender will run a “hard check” on your credit history, meaning it appears on your credit report. They will use this, along with the information you have provided about your home ownership, to evaluate your application and make a decision.

If your application is approved, they will send you an offer, which will include the following:

• The amount offered
• The repayment term (how long it will take to repay the full amount)
• The interest rate
• The total amount repayable at the end of the loan’s term, including any interest
• The monthly repayments you will be required to make, and their schedule

It’s important to review this closely to decide whether you can afford the repayments each month.

Your home may be repossessed if you fail to keep up repayments on a secured loan or your mortgage.

Determining whether you can afford to borrow is a crucial step to take, before accepting an offer from a lender.

You may find it useful to review your monthly finances, taking note of:

• How much income you receive each month (and how steady it is)
• The amount you pay to recurring payees (such as mortgage payments, loan repayments, or utility bills)
• The amount you pay for groceries and other regular monthly expenses
• Your typical monthly spend for entertainment, dining out, or anything else

Take note of the amount of your income you have left, once all of your monthly expenses have been subtracted. If it is comfortably higher than the required monthly repayments in your loan offer, and the income source is stable, then it is usually a sign that you can afford the repayments, based on your current monthly finances.

It can also help to think about long-term affordability:

• Will you still be able to afford the repayments in 5 years’ time?
• What would you do if your source of income unexpectedly stopped?

By planning for these scenarios in advance, you will find yourself in a better position to stay on top of your finances, no matter what the future holds.

If you are confident that you can afford the loan repayments, and you are happy with the terms of the agreement, you can accept the loan.

While unsecured loans can often be very quick to process, secured loans for higher amounts like £60,000 require a little extra paperwork. This is because the lender needs to review documentation relating to your home before transferring the funds.

As a result, a secured loan can take around 10 days to be processed, however this can be reduced, depending on how quickly you can supply the documents and sign paperwork.

Once you enter the loan agreement, repayment is simply a case of making the scheduled repayments set out in the contract.

It’s important to stay on top of these repayments, so you may prefer to set up an automated monthly payment from your bank account. This gives you a little extra peace of mind, and one less thing to think about each month.

Once all of the repayments have been made, along with any interest and fees, the loan will end and your account will be closed by the lender.

Your home may be repossessed if you fail to keep up repayments on a secured loan or your mortgage.

Ultimately, there is no single “best” option when it comes to borrowing. We all have different circ*mstances, different needs, and different comfort preferences.

So it’s up to you to decide whether a £60k secured loan feels right for you.

To help you make sense of it all, let’s recap everything we’ve covered in this guide: