Get help if you can't repay a secured loan.
What to do if you're unable to repay a secured loan
Your guide to secured loans and what to do if you’re unable to keep up with your repayments.
Unable to meet your secured loan repayments? We’re here to help you plan your next steps.
Taking out a secured loan is a big commitment. When you agree to the loan, you’re allowing the lender to add a charge against your home. This means, if you don’t keep up with your side of the agreement (making repayments on time), your home may be at risk of being repossessed. This is only ever a last resort for lenders, so it’s really important to speak with your lender.
If your circumstances have changed and you’re no longer able to meet your repayments, it’s normal to feel worried. Nobody wants to be in the situation where their home is at risk.
At Evolution Money, we understand your finances can change overnight. Whether you’ve lost your job or you’re suddenly hit with unexpected costs, there are many reasons you might be unable to meet your repayments. Our guide aims to explain how you can protect your finances and home.
I can’t keep up with my secured loan – what can I do?
As soon as you think you might be unable to meet your repayments, speak to your lender. It’s always best to address the situation sooner, rather than later. If you miss payments without speaking to your lender, you could be putting both your credit score and home at risk.
If your circumstances change and you’re unable to meet the repayments, your lender will want to help. Lenders will only ever consider repossession as a last resort. They’ll typically want to work with you to find a solution that works for your circumstances.
So, the first thing to do if you can’t manage your repayments is pick up the phone and speak to your lender. It might sound daunting, but remember, they’re there to help.
Will my lender help if I can’t repay my loan?
Lenders will all have their own processes for helping customers who are unable to meet repayments.
They might ask about your affordability and suggest ways you could meet your loan repayments. If it’s clear there’s no way you can afford your usual contractual repayments, your lender could offer a range of options to help you manage the loan.
Depending on your situation, this could range from giving you some breathing space to reduced monthly payments.
What are my options if I can’t repay my loan?
When it comes to repayment options, it all depends on your personal financial situation. Take a look at these common options if you’re unable to repay your secured loan:
Prioritise your debts
When it comes to repaying debt, they fall into two categories: priority and non-priority. While it’s important to keep up with all of your financial commitments, some debts are more essential than others.
Priority debts include things like your mortgage, utility bills and Council Tax. Not paying these could mean your basic supplies (like water or electricity) get switched off, or your home is at risk of repossession. As they have severe repercussions, it’s more important to make sure these are repaid.
Non-priority debts are still really important to keep on top of, but they have less damaging consequences. These include things like credit card or personal loan repayments.
As your secured loan is a second mortgage, it’s considered a priority debt. This means you should repay this before other kinds of finance. Speaking to your non-priority debt lenders could help you figure out a plan while you focus on your secured loan.
Extra breathing space
If your repayment issues are the result of a short-term issue, your lender could give you some extra time. This will all depend on your lender and their individual policies.
Generally speaking, a late repayment is better than no repayment at all. Speaking to your lender as soon as possible could mean they’ll agree to accept your payment at a later date. This will mean you’ll have some extra breathing space to meet your repayment.
Reduced monthly payments
If your affordability has dropped for the foreseeable future, your lender might agree to lower your monthly repayments. With smaller repayments, you could have more financial wiggle room on a monthly basis. This could help you better manage your loan, though it could impact your credit file.
However, it’s worth remembering a longer loan term can sometimes mean more interest payments in total – which could work out as more expensive in the long run.
Speak to a professional
Whatever your circumstances, it’s always worth seeking impartial debt advice. A debt charity can help you plan your next steps and see if there’s a way you can cut monthly costs.
Here’s some free and impartial services you can contact:
Money Advice Service – www.moneyadviceservice.org.uk/en/corporate/contact-us
National Debtline – www.nationaldebtline.org
StepChange Debt Charity – www.stepchange.org
Debt Advice Foundation – www.debtadvicefoundation.org
Payplan – www.payplan.com
For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
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.
