Should you get a 20-year loan?
Is a 20-year loan right for you?
Taking out a secured or unsecured loan needs to work for you now and in the future. Whatever amount you’re borrowing, choosing the right loan term is crucial. You should be able to comfortably afford repayments and be confident that you can do so throughout the agreement.
When you’re thinking of checking your loan eligibility, it’s always worth considering whether a 20-year loan is right for you before applying. Our guide is here to help.
What are 20-year loans?
A 20-year loan is simply a loan that’s repaid over 20 years. This type of long-term agreement is more common with secured loans, like first and second-charge mortgages, which use property as security for the lender. You can also apply to take out a secured loan with a shorter term if you want to borrow less or repay the money sooner.
How much could I borrow with a 20-year loan?
Taking out the right loan amount ensures you get the funds you need without putting too much pressure on your finances. A long-term loan spread over 20 years means you could borrow a larger sum while still having manageable repayments.
A secured 20-year loan could give you the option to borrow £20,000, £30,000 or even as much as £100,000. Smaller amounts are available, but it’s worth paying those off sooner to avoid higher interest costs relative to your loan. Dependent on your needs and circumstances.
What could I use a 20-year loan for?
Borrowing a larger sum over a longer period gives you the option to bring your big ambitions and plans to life. You could use 20-year loans to:
- Invest in extensive home improvements that add significant value to your property
- Spread the cost of buying your car or bike
- Consolidate your debts to make them easier to manage
- Pay for new equipment or services to help grow your business
What 20-year loan rates could I get?
The interest rate you’re offered for any secured or unsecured loan usually depends on various factors, including:
- Your credit score and history
- The amount you’re borrowing
- The type of loan you’re taking out
- A lender’s standard rates and policies
- The deposit you put down (for mortgages)
- The value of your property used as security (for secured loans)
- Your chosen loan term
All these factors determine the level of risk a lender is taking on. This then influences the interest rate they may offer.
What are the pros and cons of 20-year loans?
Pros
- Lower monthly repayments: With longer to repay your loan, you can bring down your monthly repayments to make them easier on your day-to-day finances.
- Borrow more: If you need a larger sum for a big investment, a long-term loan could help you borrow more to meet your needs.
- Improved credit score: Making loan repayments on time can demonstrate your ability to manage credit and may positively influence your credit score.
Cons
- Long-term financial commitment: Committing to a 20-year loan needs consideration. It will show on your credit report and could impact your chances of taking out other forms of credit.
- More interest over the loan term: A longer loan term means you could pay more interest overall, even if the rate is lower.
- Missing repayments puts your property at risk: As with any secured loan, issues repaying the loan could see your home being repossessed by your lender.
Am I eligible for a 20-year loan?
That depends on you and the lender you apply with. Typical eligibility criteria are as follows:
- You must be a homeowner
- You must be between the ages of 21 and 70
- You must live in the UK
- You must be able to afford the repayments comfortably from your income
Even if you’ve got a poor credit history, lenders will often consider the bigger picture when considering applications. The first step is an eligibility check that won’t affect your credit score.
Apply for a 20-year secured loan with Evolution Money
If you’re looking to borrow a larger sum with a 20-year loan, check your eligibility with us today. It doesn’t matter if you’ve been turned away by other lenders in the past. We look at what you can offer, not what you can’t. And our initial eligibility check doesn’t have any effect on your credit score.
All loans are subject to status and affordability checks. Terms and conditions apply.
For other helpful guides on money, loans and everything related, head over to our help and advice hub.
Representative 28.96% APRC (Variable)
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
