Secured Debt Consolidation Loans

Consolidate all your debts into one more manageable repayment using a secured loan. Check your eligibility and apply online with Choose Wisely.

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Typical 10.8% APRC variable. Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable.

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Table of contents

Written by Mark Grimley
Read time: ~5 mins
Published: 4th October 2023

What is a secured debt consolidation loan?

Debt consolidation loans allow you to combine all of your existing debts into one hassle-free loan that can often be more affordable.

There are two types of debt consolidation loans - secured and unsecured.

A secured debt consolidation loan is when you use an asset you own - typically your home, as a way to guarantee you’ll repay what you borrow. If you’re unable to repay the money you’ve borrowed, your loan provider will be entitled to sell your house to recover the funds to repay the money you owe them.

Homeowner debt consolidation loans are riskier for you, the borrower, but can be easier to be approved for if you have a poor credit rating because they reduce the risk for the lender.

Unsecured debt consolidation loans come with less risk for you, but you may pay a higher rate of interest and be limited by how much you can borrow.

Debt consolidation loans allow you to combine multiple debts, such as your existing credit cards, overdrafts, loans or store cards into one single loan. This not only makes it easier for you to manage your debts because you only have one monthly repayment to make, but can also reduce the amount of interest you pay overall, meaning you could reduce the time it takes you to repay everything you owe.

Can I get a secured loan to consolidate my debts?

You may qualify for a secured consolidation loan if you own your own home or property.

To be eligible to apply for a secured consolidation loan, you must:

  • have a mortgage
  • have equity in the property
  • be over 18
  • be a resident in the UK

If you have a bad credit score, it may be easier for you to be approved for a secured loan rather than a personal or unsecured loan because you’re offering the lender collateral.

Borrowing against your home to consolidate debt is possible, but a secured debt consolidation loan comes with the risk that you could lose your home if you’re unable to repay what you owe.

How do secured debt consolidation loans work?

When you take out a secured debt consolidation loan against your home to combine and pay off all your existing debts, you’re using your property as collateral.

Instead of repaying lots of lenders at different times of the month, you simply make one monthly repayment to one lender, often at a lower rate of interest than your original debts combined.

Put simply, you merge all your debts together into one lower-cost loan to reduce the amount of interest you’re paying and the amount you repay monthly towards your debt.

Here's an example:

You have three credit card balances that all charge interest rates of 25%, plus an overdue, high-cost loan which you’re paying late payment penalties on each month.

Securing a debt consolidation loan with an interest rate of 10% for example, could save you hundreds of pounds in interest and fees and help you to rebuild your damaged credit score.

There is a risk you could lose your home if you fail to keep up repayments, so it’s important to seek free debt advice before you consider taking out a secured debt consolidation loan.

Do not sign up for a secured loan without being sure you have the funds to repay what you owe every month.

What can I use a secured debt consolidation loan for?

People use debt consolidation loans to regain control over bad debts and reduce:

  • the number of creditors owed
  • high interest rates on various debts
  • monthly repayments
  • multiple payment dates
  • the total cost of loans and debts

What debts can I consolidate with a secured loan?

Most types of debt can be paid off with a debt consolidation loan. The most popular debts to clear with a consolidation loan include:

  • Credit card balances
  • Personal bank loans
  • Overdrafts
  • Store cards
  • Short term, high cost loans
  • Business loans

Can I get a secured consolidation loan with bad credit?

Secured debt consolidation loans for bad credit are an option if you own your home but have a poor credit rating.

Secured loan providers may be willing to lend to you even if you’ve had problems paying back what you owe in the past. It could even be easier to get approved for a secured consolidation loan because you’re offering the lender collateral, which reduces the risk to them, but increases the risk for you.

However, because lenders view people with bad credit scores as high-risk borrowers, you could be charged a higher interest rate and only offered smaller sized loans.

What are the pros and cons of secured debt consolidation loans?

There are advantages to combining all of your debts so they're easier to manage and cost you less. These types of loans can be an ideal solution for some; however, there are also disadvantages to secured debt consolidation loans.

Here are the pros and cons to help you decide whether secured loans to pay off debts are right for you.

  • Your monthly repayments will be lower because you could be paying less intterest on your debts
  • Your debts will be easier to manage because there'll be just one lender and one monthly repayment
  • You could rebuild your credit score if you pay what you owe regularly and on time
  • You can borrow more money with a secured loan and typically pay less interest than you would on an unsecured consolidation loan
  • You may find a secured consolidation loan easier to be approved if you have a bad credit score
  • You may need to pay set-up costs, additional charges and legal fees
  • you'll damage your credit score further if you miss or make late payments
  • Your home could be repossessed if you fail to make repayments and settle the loan
  • It's a major commitment so you'll need a backup plan if your financial circumstances change
  • You could end up in an even worse situation if you start borrowing money from other lenders again as well as having a debt consolidation loan

Are secured debt consolidation loans a good idea?

You'll need to weigh up the pros and cons of applying for a secured debt consolidation loan, but ultimately whether it's a good idea depends on your financial circumstances.

Before committing to this type of loan, consider the following:

  • Are you 100% commited to clearing your debts and making a fresh start?
  • Have you sought financial advice for free from a debt charity?
  • Can you afford the loan repayments until the debt is totally cleared?
  • Do you have a guaranteed regular and stable income?
  • Are you prepared to risk losing your home if you can't repay the loan?
  • Will you reduce your spending where you can and refrain from borrowing with other lenders once your consolidation loan is in place?
  • Is your credit score good enough to avoid very high interest rates?
  • Have you compared your options using a comparison site like ours?

If you decide to go ahead and apply for a secured debt consolidation loan, make sure you’re getting the best deal for your financial circumstances. Find out from all of your creditors what your settlement amounts are and work out the total cost of the loan before making a decision.

What are the alternatives to secured debt consolidation loans?

It's worth exploring alternatives to a debt consolidation loan, such as renegotiating payment terms with your existing lenders or looking at other low cost ways to settle your outstanding debts. Here are a couple of alternatives to consider:

Unsecured debt consolidation loans

Unlike a secured loan, you don't need to be a homeowner to take out an unsecured loan to consolidate your debts. These loans can be a good way to clear the balance of multiple credit cards or other high-interest, short-term debts.

You may not get the lowest interest rates like you'd get with a secured loan, but the repayment terms are typically shorter and you won’t risk losing your home.

The application process is very similar to a personal loan application and is simpler because you don't need to provide collateral, have your house valued or pay legal fees.

0% balance transfer cards

This is a type of credit card which allows you to transfer your balances from other credit card accounts.

Typically balance transfer credit cards offer an introductory 0% APR (Annual Percentage Rate) on your account for up to 12 months, but can be for as long as 31 months. This means you’ll pay nothing in interest on your transferred balances for that initial term, however once this term expires the interest on your balance may be high.

If you just want to pay off several credit cards and you have a decent credit score, a balance transfer card could make your existing credit card borrowing much cheaper by reducing how much interest you pay.


This involves switching your existing mortgage to a new deal and releasing some equity.

Like with a secured loan, the new mortgage is secured against your home, so you'll need to have a large amount of equity in the property to qualify. You can remortgage with the same lender or with a different provider for a better interest rate if you're eligible.

Bear in mind when you increase your mortgage, your monthly payments are likely to go up, but if you’re paying penalties and high interest rates on your other debts, this may work out as a more affordable option.

Secured debt consolidation loans FAQs

How do I apply for a secured debt consolidation loan?

A secured debt consolidation loan is a big commitment, especially if you’re already in financial difficulty.

Before applying for a debt consolidation loan, it’s a good idea to take these steps:

1. List all your debts - make a note of the lender, the interest rate you’re paying, and the amount you owe

2. Check your existing loans for early repayment fees

3. Compare secured debt consolidation providers using a comparison website like ours to calculate the total cost of the loan

Before taking out a secured debt consolidation loan, you should consider seeking advice from a debt charity or independent financial advisor.

Once you're satisfied that a secured debt consolidation is your best option, apply with the lender and be prepared to supply documents to support your application such as ID, mortgage documents and evidence of income.

What happens if I can't repay my secured debt consolidation loan?

If you can’t make repayments on your secured loan, you risk losing your home.

Talk to your lender as soon as you think you might have trouble making your repayments. You may be able to reach an agreement with the lender for them to accept temporary lower payments or refinance your loan over a longer period.

Your lender will have the legal right to repossess your property and may start court proceedings if you ignore warnings.

Does consolidating debt hurt your credit score?

If you’re approved for a secured debt consolidation loan and make your repayments in full and on time, you will be making progress to improve your credit score.

If you want to compare loans and check your eligibility, you can use a comparison website like ours that performs a soft search on your credit report to assess your creditworthiness. A soft search doesn’t appear on your credit report, only you will be able to see that a search has been performed, not other lenders. If you choose to continue with a lender and complete a full application directly with them, you will then undergo a hard credit check.

If you’re unable to repay a loan or default on your repayments, you will damage your credit rating.


Written by
Mark Grimley
Head of Partnerships & Take Control Author at Choose Wisely

Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.

Important Information.

All of the information in this guide is correct at the time of writing.

If you complete a loan search application on the Choose Wisely website, the rates shown may vary based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 13.9%APR to a maximum of 1721%APR Representative and loan repayment periods range from 3 to 60 months.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
You can access your credit report for free from Credit Karma, Clearscore or Experian.