At a Glance
- Enter your loan amount, property value, and outstanding mortgage to check whether secured borrowing is accessible at 85% LTV; see how the equity check works
- The tool compares total interest, monthly repayment, and total repayable for both options side by side; see understanding the comparison
- The crossover chart shows the loan amount where secured becomes cheaper than unsecured at your chosen rates and terms; see the crossover point explained
- A longer secured term can make it more expensive overall even when the rate is lower; see why rate alone does not tell the whole story
- Secured lending puts your property at risk if repayments are not maintained; this applies regardless of whether secured is the cheaper option; see the risk of secured borrowing
- All figures use illustrative APR inputs; actual rates depend on your credit profile, lender, and market conditions; see frequently asked question
Secured vs Unsecured Loan Threshold Tool
Secured vs unsecured: threshold and cost comparator
See which option costs less for your borrowing amount — and where the crossover point falls. All figures are illustrative only.
At your loan amount
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Total interest saving
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| Metric | Secured loan | Unsecured loan | Difference |
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Total interest across loan amounts — where does secured become cheaper?
Figures are illustrative only. APR is used for the repayment calculation — actual rates depend on credit profile, lender, and market conditions. The 85% LTV ceiling is a typical industry maximum for secured / second charge lending; some lenders may apply lower limits. This tool does not constitute financial advice. Secured lending puts your home at risk if repayments are not maintained.
This comparator is designed to answer one specific question: for your borrowing amount, at illustrative rates and terms, does a secured loan cost more or less in total interest than an unsecured loan? It also shows the loan amount at which the answer changes, which can be more useful for planning than a single-scenario comparison.
The tool is not a quote generator and the figures are not drawn from live lender data. The APR inputs are illustrative starting points. Use them as a sense-check of how the two product types compare in principle, and then get actual rate quotes based on your credit profile before making a borrowing decision.
What it does
Compares total interest, monthly repayment, and total repayable for a secured and an unsecured loan at your chosen amount, rate, and term. Checks whether your equity position makes secured borrowing accessible at 85% LTV. Shows the crossover chart across the full £500 to £60,000 range.
Who it is for
Anyone comparing borrowing options who wants to understand the cost trade-offs between product types before approaching lenders. Useful at the research stage, not the application stage. Homeowners considering a second charge mortgage alongside an unsecured personal loan will find the equity check particularly relevant.
What it does not do
The tool does not know your actual credit profile or the rates you would qualify for. It cannot tell you which product a lender would approve, and it does not factor in arrangement fees, broker fees, or early repayment charges. These costs can change the true comparison, particularly on shorter terms.
When to use it
Use it early in the process to understand whether secured or unsecured borrowing is likely to cost less at your loan amount, and what the term trade-offs look like. Return to it after receiving actual rate quotes to run a like-for-like comparison with the numbers a lender has given you.
How this works
The tool uses standard UK loan amortisation to calculate monthly repayments and total interest for each product. The steps below explain what each section of the tool is doing and how to read the outputs.
The equity check
Before comparing costs, the tool checks whether your property equity supports secured borrowing at your loan amount. It uses a standard 85% LTV ceiling, which is the typical maximum for second charge and secured lending. If the combined LTV after the loan would exceed 85%, secured borrowing is flagged as likely inaccessible at that amount. If you are approaching the ceiling, the tool flags this as a caution even where the loan is technically within range.
The cost calculation
The repayment formula is: M = P x r(1+r)^n divided by ((1+r)^n minus 1), where P is the loan amount, r is the monthly rate (APR divided by 12 divided by 100), and n is the number of monthly payments. Total interest is total repayable minus the original loan amount. The comparison table shows monthly repayment, total interest, total repayable, APR, and term for each option side by side.
The crossover chart
The chart calculates total interest for both products at every loan amount from £500 to £60,000 in £500 steps, using your chosen rates and terms. Where the secured line drops below the unsecured line is the crossover point. The amber markers show where your current loan amount sits on each line. The secured line stops at your equity limit, where it becomes inaccessible.
The verdict
The verdict banner summarises which option costs less at your specific loan amount. Four outcomes are possible: secured costs less, unsecured costs less, the longer secured term makes it more expensive despite the lower rate, or secured is not accessible due to insufficient equity. Each outcome is colour-coded and includes the interest saving or additional cost in absolute terms.
Understanding the comparison
Three figures in the comparison table are worth reading together rather than in isolation. Each one answers a different question about the two products.
Monthly repayment
The secured loan typically has a lower monthly repayment because it is spread over a longer term. A lower monthly figure may feel more manageable, but it does not mean the loan costs less overall. Total interest is the more meaningful measure of true cost. Monthly repayment matters most for affordability: can the payment be maintained from income alongside existing commitments?
Total interest
Total interest is the clearest measure of how much borrowing costs. A lower total interest figure means less money leaves your pocket over the life of the loan, regardless of the monthly amount. This is the figure the verdict banner focuses on. Where secured costs less in total interest, the lower rate has more than offset the longer term. Where it costs more, the longer term has more than offset the lower rate.
Total repayable
Total repayable is the loan amount plus total interest. It tells you the full cash outflow over the life of the borrowing. On longer-term secured loans, total repayable can be significantly higher than the original loan even at a low rate, because interest compounds across more months. It is a useful reality check when the monthly repayment figure looks attractively small.
APR and term together
APR and term interact in ways that are not always intuitive. A lower APR does not guarantee a lower total cost if the term is considerably longer. The tool is designed to make this visible. Try holding the rates constant and shortening or lengthening each term to see how quickly the total interest figures change. The crossover chart makes the interaction visible across the full loan amount range.
The crossover point
The crossover point is the loan amount at which secured borrowing becomes cheaper than unsecured at your chosen rates and terms. Below this amount, the unsecured option costs less in total interest because the shorter term outweighs the rate difference. Above it, the secured option costs less because the lower rate outweighs the longer term.
The crossover point is not fixed. It shifts every time you change the APR or term for either product. At shorter secured terms, the crossover falls lower, making secured cheaper across a wider range of amounts. At longer secured terms, the crossover rises or disappears entirely. The chart makes this dynamic visible: as you adjust the inputs, watch how the two lines intersect at different points.
The risk of secured borrowing
When secured borrowing is the cheaper option in the tool, it is worth being clear about what that means and what it does not mean. A lower total interest figure is a financial advantage, but it does not change the fundamental nature of the product. A secured loan uses your property as collateral. If you cannot maintain repayments, your home may be repossessed. This risk exists regardless of whether the loan costs less than the unsecured alternative.
This is not a reason to avoid secured borrowing. For many people it is the right product, particularly at higher loan amounts or where the lower monthly repayment meaningfully improves household cash flow. But it is a reason to ensure the monthly repayment is genuinely affordable before committing, and to have a clear plan for what happens if income changes. Our guide to the risks of secured loans covers this in more detail.
Affordability, not cost
The tool compares cost. Affordability is a separate question. A secured loan may cost less in total interest but carry a monthly repayment that stretches the household budget uncomfortably. An unsecured loan may cost more in total interest but be paid off faster, reducing the period of financial exposure. Both questions matter, and they are not the same question.
Fees not included
The tool does not include arrangement fees, broker fees, or valuation fees, all of which add to the true cost of a secured loan. On smaller loan amounts or shorter terms, these fees can shift the comparison significantly. When comparing actual lender quotes, ask for the total cost of credit including all fees, not just the APR and monthly repayment.
Frequently asked questions
Does a lower APR on a secured loan always mean it costs less than an unsecured loan?
Not necessarily. APR tells you the annual rate of interest, but total interest depends on the rate and the term together. A secured loan at 7% APR over 10 years can cost more in total interest than an unsecured loan at 12% APR over 5 years, because interest accumulates across twice as many monthly payments. The tool is specifically designed to make this visible: the crossover chart shows exactly where the secured option becomes cheaper than the unsecured option across different loan amounts at your chosen inputs.
The practical implication is that rate comparisons alone can be misleading. Lenders sometimes present secured borrowing as the cheaper option based on APR, which can be true in rate terms but not in total cost terms when the term is longer. Before deciding, it is worth using this tool with both the rate and term you have been quoted for each product to see which genuinely costs less for your amount and your expected repayment period.
What does the 85% LTV ceiling mean in practice?
LTV stands for loan-to-value, which is the ratio of total borrowing secured against a property to the property’s current value. If your property is worth £300,000 and your outstanding mortgage is £200,000, your current LTV is approximately 67%. An 85% LTV ceiling means the total secured debt against the property, including any new loan, cannot exceed 85% of its value. In this example, that limits additional secured borrowing to approximately £55,000 (£300,000 x 0.85 minus £200,000).
The 85% figure is a common industry ceiling for second charge and secured lending, but individual lenders may set their own limits. Some lenders cap at 75% or 80%, particularly for properties that are non-standard or in lower-demand areas. The tool uses 85% as the illustrative maximum, which means the equity check is a starting indication rather than a definitive lender decision. Our guide to understanding LTV ratios for secured loans explains how lenders calculate and apply these limits.
When does the crossover point matter for my decision?
The crossover point matters most when your loan amount is close to the level where the two products become equivalent in cost. If your amount is well above the crossover, secured is likely to compare favourably in total interest terms at those rates and terms. If it is well below, unsecured is likely to cost less regardless of reasonable variations in the inputs. The most useful scenario is when you are borrowing an amount that sits near the crossover, because in that range small changes to the term or rate can flip the outcome.
It also matters when you are comparing a specific lender quote against the tool’s illustrative rates. If you have been offered 8% APR over 8 years on a secured loan and 14% APR over 5 years on an unsecured loan, entering those figures into the tool gives you a much more reliable comparison than the illustrative defaults. The crossover chart then shows you whether a smaller or larger loan amount would be more or less favourably priced under the secured option.
What are the risks of choosing a secured loan even when it costs less?
The primary risk is that a secured loan uses your property as collateral. If you cannot maintain repayments for any reason, the lender has the legal right to seek repossession of your home. This risk does not disappear because the loan is cheaper in total interest terms. A secured loan may be the right choice financially, but the decision should include an honest assessment of whether the monthly repayment is genuinely sustainable if your income fell or your circumstances changed.
There are also practical risks that are not captured in the cost comparison. Secured lending typically involves more fees than unsecured lending, including arrangement fees, broker fees, and sometimes valuation fees, which add to the true cost. Early repayment charges are more common on secured products and can be significant if you want to pay the loan off before the end of the term. Our guide to secured vs unsecured loans covers the full range of trade-offs between the two product types.
Can I use this tool if I do not have a mortgage?
Yes. Set the outstanding mortgage slider to zero and enter your property value. The tool will calculate your available equity at 85% LTV based on the full property value, and the equity check will show whether secured borrowing is accessible at your loan amount. With no mortgage outstanding, most homeowners have significant equity available, and the equity check is unlikely to flag a block unless the loan amount is unusually large relative to the property value.
If you own your property outright, a secured loan without a mortgage is available from many lenders and is often referred to as a first charge loan rather than a second charge. The cost comparison in the tool works in exactly the same way regardless of whether a mortgage is outstanding. The equity check simply uses the full property value as the base for the LTV calculation.
Squaring Up
This tool shows you the cost comparison between secured and unsecured borrowing at illustrative rates and terms, and identifies the loan amount at which one becomes cheaper than the other. It is a planning tool, not a lender decision. The inputs are adjustable precisely because the right comparison depends on the actual rates and terms you are quoted, not on generic defaults.
- Rate and term interact. A lower APR on a secured loan does not automatically mean lower total interest. Always check total interest, not just the rate.
- The crossover point shifts with the inputs. Shortening the secured term or widening the rate gap between the two products changes where secured becomes cheaper. The chart makes this visible.
- The equity check is a starting point. An 85% LTV ceiling is the typical industry maximum, but individual lenders set their own limits and will assess your specific property and profile.
- Fees are not included. Arrangement fees, broker fees, and valuation costs are real costs of secured borrowing that can shift the comparison. Ask for the total cost of credit when getting actual quotes.
- Cost and risk are separate questions. Secured may cost less in total interest and still carry meaningful risk if your income is uncertain or the monthly repayment leaves limited headroom.
If you are ready to explore your options in more detail, the guides below cover the key considerations for both product types.
Ready to see what you could borrow?
Checking won’t harm your credit score Check eligibilityFigures are illustrative only and are not a quote, offer, or guarantee. APR inputs are adjustable starting points, not rates available to any specific borrower. Actual rates depend on credit profile, lender, loan amount, and market conditions. The 85% LTV ceiling used in the equity check is a typical industry maximum; individual lenders may apply lower limits. Fees including arrangement fees, broker fees, and valuation costs are not included in the comparison. This tool does not constitute financial advice. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
