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Depending on your circumstances, you may prefer to repay a secured loan in a slightly different way. If so, an interest-only secured loan could be an option, allowing you to access the funds you need upfront before clearing the full balance at a later date.
It can be a way of freeing up equity in your property for home renovations or other purposes.
The monthly repayment on an interest-only loan is lower than that of a standard capital repayment loan. This reduced payment can be more appealing to some borrowers, depending on their current circumstances and future plans.
We explain more about how interest-only secured loans work, what lenders typically look for, and how you can secure the best deal
An interest-only secured loan is a loan facility that enables homeowners with a mortgage to raise funds via the equity they have in the property.
As with a standard secured loan, the loan is secured against the property, which typically allows you to borrow more, and at lower rates of interest, compared to unsecured loans.
It also means that the lender can repossess and sell the property in the event of a default, although this is often the last resort.
If you take out an interest-only secured loan, you will only need to repay the interest on the amount you have borrowed, instead of repaying the amount itself. When you reach the end of the loan term, you will still owe the full amount borrowed.
This is different from a standard secured loan, which involves making monthly repayments that go towards clearing both the interest and the amount borrowed. The balance is slowly cleared as you go, so when you reach the end of the loan term there is nothing left to pay.
We work with some specialist lenders that can offer interest-only secured loans to customers.
Due to the nature of the loan, the eligibility criteria may be a little stricter than normal, which helps to protect both the lender and the borrower in the long-term.
This usually relates to the repayment plan you have at the end of the loan term, as the full loan amount will be due at the end of the loan term.
Depending on the lender, there may be a minimum loan amount and/or a maximum LTV limit in place.
You can speak with a member of the Willows team to find out if an interest-only secured loan is the right option for you.
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At the end of an interest-only secured loan term you will need to repay the full loan amount. This is because the monthly payments you have been making throughout the term have only contributed to clearing the interest on the loan, rather than the loan itself.
When applying for an interest-only secured loan, lenders will require proof of how you plan to repay the full amount at the end of the term. A common approach is to downsize your property or settle the balance using a pension pot or other assets.
Once a loan has been agreed and the funds transferred, it will be your responsibility to ensure that you have a plan in place and that you have sufficient funds to pay the full balance at the end of the term.
So, if you are thinking of taking out an interest-only secured loan, it’s a good idea to seek independent financial advice to discuss your options.
Short-term fixed (1-3 Years)
This ensures your payments remain the same for a specified period, which could be between 2-3 years, for example. Once this period ends you will move to the lender’s standard variable rate.
Fixed Term (5 year +)
If you prefer to have consistent monthly payments each month, this might be the better option for you, especially if you want to keep a close eye on your budget like a 5 year fixed.
Variable Rate
With this option, the interest rate changes in-line with the Bank of England base rate or lenders standard variable rate (SVR). This could mean your monthly payments increase or decrease, depending on where the rate is set.
To get an interest-only secured loan you will need to submit a loan application to the lender of your choice.
The application process will involve affordability and credit checks, as well as a property valuation. As mentioned above, the lender will also ask for proof of your repayment plan to ensure you can clear the full balance at the end of the term.
Loan costs can vary greatly from lender to lender, as there are lots of factors that need to be taken into consideration, so you should take your time to do your research and find the best deal that suits you.
You may find it helpful to speak with a reputable secured loan broker, who can make the process much easier to manage.
Working with the right broker can allow you to prepare the required paperwork and organise your budget before you submit an application. They will also assist you in finding the right lender and best deal based on your circumstances.
Getting a quote won’t affect your credit score
We’re extremely proud to be rated ‘Excellent’ for our service standards. We’ve helped thousands of customers across the UK over the last 15 years to find the right finance for their needs – no matter how complicated the circumstances. And we look forward to helping you.
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Speak with one of our advisors who can tell you more about the different loan types and advise you on which one is most suitable for you.
Interest-only secured loans are a more specialist option compared to standard loans, so you may find it helpful to speak with a specialist who can offer advice based on your circumstances. At Willows we have a strong track record of helping borrowers find the best loans by matching them with the right lenders.
To get started, call us on 01656 766 158 to speak with one of our expert advisors for free.
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LOANS ARE SECURED AGAINST PROPERTY. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED UPON IT.
Willows Finance is a credit broker not a lender using a representative panel of lenders. We work with a Panel of Lenders whose particulars will be supplied upon request to find a potentially suitable arrangement for your consideration.
For credit broking, we do not provide or offer advice or recommendation. Whichever lender we introduce you to we will receive commission from. Different lenders pay different amounts based on different commission models and interest amounts. For transparency we work with the following commission models: percentage of the amount you borrow, rate for risk (this is based on the risk profile of the proposal).
Willows Finance Limited is authorised and regulated by the Financial Conduct Authority. Our Financial Conduct Authority FCA register number is 670052. We are registered under the Data Protection Act No. Z1447660 and are a member of the Association of Finance Brokers.
Willows Finance Limited registered address is Brocastle, Bridgend CF35 5AS. Company registered in England.
Registration number 6678545. Copyright © 2025 Willows Finance Ltd
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At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
This statement provides you with details of the type of information we may hold about you, how we obtain and use information and how we protect your privacy.
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
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