Best Homeowner Loans

Check out our extensive guide to find the best homeowner loans available for you.

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

Rebecca Goodman

Edited By

Rebecca Goodman

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If you need to raise cash for the next stage of your life, applying for a homeowner loan might be one option.

Providing you have a property you own and sufficient equity in that property, you might be able to secure a large loan with low interest rates and long repayment terms.

However, there are benefits and drawbacks to homeowner loans, and they won't be the right choice for everyone.

In this article, we’ll explore how homeowner loans work, what you need to know about them, and pick some of our favourite homeowner loans in 2024.

1. Pepper Money★★★★★Learn more
2. Selina Finance★★★★★Learn more
3. Shawbrook Bank★★★★Learn more
4. Norton Finance★★★★Learn more
5. Ocean Finance★★★★Learn more
6. Evolution Money★★★★Learn more

What is a homeowner loan?

A homeowner loan is a loan that is secured against your home. Your home is used as collateral and can be repossessed by the lender if you default on the homeowner loan. 

As this is a secured loan, you could borrow a large sum of cash in a homeowner loan and gain a lower interest rate. 

But there are big risks to consider too. If you aren't able to repay the loan, your home could be seized.

Homeownership is a right of passage for many adults. At present, 37.5% of UK adults have a mortgage or a homeowner loan, although the number of mortgage approvals is in decline.

Homeowner Loan
Image: Money

The number of mortgage approvals in December 2021 reached a high of 74,412 that month alone. One year later in December 2022, only 35,612 mortgages were approved in the UK.

Mortgage Approvals
Image: Money

How do homeowner loans work?

A homeowner loan is an additional loan product that is separate from your mortgage. You borrow money from a lender which is secured on your property. 

This means that if you default on loan repayments, the lender can seize your home. You can only apply for a homeowner loan if you have sufficient equity in the property initially. 

What is equity?

Equity is the difference between the value of your home and the amount you owe on your mortgage and other secured loans. 

So, if your home is worth £300,000 and your mortgage and secured loans total £120,000, you have £180,000 equity in your home. This is a good amount of equity and should attract your lender when you apply for a homeowner loan.

If you have a much smaller amount of equity in your home, for example, £20,000, chances are that your lender will not approve a homeowner loan. This is because the equity in your home is too small and could diminish further with a decrease in house prices.

How can I apply for a homeowner loan?

Your homeowner loan will work in the same way as your mortgage. Your home will be valued and your credit history assessed. The amount of money you can borrow will be determined by the lender, with different lenders often reaching different conclusions. 

You will pay back the homeowner loan with added interest across loan terms of 1 year to 35 years.

Additional considerations when taking out a homeowner loan include any arrangement fees or valuation fees that you will need to pay. You should also take notice of early repayment charges that the lender may stipulate before agreeing to the homeowner loan.

Is a homeowner loan the same as a mortgage?

A homeowner loan is a different financial product to a mortgage, although they are similar.


A mortgage is a loan taken out to buy a property. You will usually have a sizable deposit to put down to buy the house, whilst the remaining amount is financed through a mortgage. 

You will find the property you want to buy and make an offer to the vendor or estate agent. A lender will then loan you the rest of the money.

You will pay a monthly payment across the set loan term, with interest continuously added. If you do not pay your mortgage payments, however, the lender can repossess the property.

Homeowner loan

A homeowner loan is a loan taken out when you already own a home. You may still have a mortgage or you may have already paid off your mortgage. You cannot apply for a homeowner loan if you do not have a property to offer as collateral.

You will pay homeowner loan repayments every month for the duration of the loan term, with interest added. If you do not pay your repayments for the homeowner loan, however, the lender can repossess your property.

Do banks offer homeowner loans?

Most banks offer homeowner loans, as well as other lenders. However, you may find a loan broker is a good option for you when looking for the best homeowner loans available.

A loan broker will take all of your information and find the best homeowner loan options for your circumstances. You will need to provide the loan broker with your ID, proof of address, and evidence of your finances, such as bank statements and payslips.

You will be presented with several options, with the loan broker specifying which option offers you the lowest interest rate, or the lowest fees and charges. You can then opt for the best homeowner loan that meets your needs.

Using the services of a loan broker is great as you do not have to do anything except provide them with your information. They will explore all available options for you and utilise their insider knowledge and contacts. You will need to pay a loan broker a fee, however.

Before agreeing to a financial product or paying a fee to a loan broker, get free financial advice. Search online broker platforms or contact the Financial Planning Association for advice on your personalised options.

How much can I borrow against my home?

The amount you can borrow against your home will depend on your circumstances and the available equity in your home. The higher your credit rating and the greater your equity, the larger the amount of cash you could borrow from the lender.

Are homeowner loans a good idea?

Homeowner loans can be a good idea if you need to raise funds. This could be for a range of different reasons, such as a house extension, a house deposit for a second property, or to pay university tuition fees. You will take out a homeowner loan to pay for large purchases, to be paid back over time.

However, if you already have other loans that need to be paid back each month, you could increase your chances of defaulting by adding another loan to your credit history. 

Only take out a loan or borrow against your home if you really need to and if you are sure you can pay it back.

Can I get a homeowner loan with bad credit?

You could get a homeowner loan with bad credit if you have a large amount of equity in your home. Many lenders will look at the available equity more than your actual credit score, although a great credit rating and a large amount of equity are the best combination.

Higher interest rates and shorter loan terms may come with homeowner loans for bad credit, however, so make sure you can meet all repayments before agreeing to the loan.

What are the alternatives?

There are several alternatives to homeowner loans to consider, including the following:

Unsecured loans

If you have a good credit score and earn a high income, you could apply for an unsecured loan. Unsecured loans are loans that are not secured on an asset, such as your home. 

Due to the lack of collateral, the lender will usually charge you a higher interest rate and shorter loan terms, requiring full repayment of the loan after a short time.


A remortgage is different to a homeowner loan as it increases the original mortgage that you took out to buy the property. 

You can apply for large amounts of cash through a remortgage as long as you have sufficient equity in your home. However, your home will be repossessed if you do not pay your repayments.

A key consideration concerning a remortgage is that your loan term may not increase whilst your mortgage balance will. This may mean that you owe the lender a considerable amount of money once the mortgage term has ended.

Equity release

An equity release mortgage allows you to borrow the equity in your home, sometimes without monthly repayments. This is usually an option for homeowners who have paid off their mortgage.

Depending on the equity release deal you accept, you could agree to a lifetime mortgage or a home reversion scheme agreement. 

All equity release plans will aim to release your equity so you can use your money now, with the lender reclaiming the money owed once your house is sold or you have passed away.

Debt consolidation

If you are considering borrowing money with a homeowner loan to pay off existing debts, a debt consolidation loan could be the better choice. 

With a debt consolidation loan, your existing debts will be combined so you only have one monthly payment and one interest rate to manage. This is a good option to take if you have a bad credit history and need to get out of debt.

Startup loan

If you want to take out a homeowner loan to fund a new startup business, it might be a better idea to apply for a startup business loan instead. Once you know your startup costs, apply for a startup business loan with a lender, showing the lender your business plan and financial forecasts.

Interest-free credit cards

A further alternative to homeowner loans is an interest-free credit card. With this option, you can ensure you only pay back the money you have borrowed, with zero interest added.

Credit cards are not secured on an asset so your home will not be repossessed. However, the credit limit on most credit cards may not reach £1,200, so maybe insufficient to fund your requirements.

Once the 0% interest rate ends, you will start paying interest on anything that remains on the card.

The pros and cons of a homeowner loan

Are you looking for a succinct list of pros and cons concerning homeowner loans?

Look no further than this section.


✔️ Large loan amounts: If you have sufficient equity in your home, you could borrow a substantial amount of money with a homeowner loan.

✔️ Simpler process: As you already have an asset with a large equity, the process to apply for a homeowner loan is often simpler.

✔️ Flexible credit scoring: If you have a high amount of equity in your property but a less than impressive credit rating, you could still be successful in acquiring a homeowner loan.

✔️ Lower interest rates: As you are applying for a secured loan on your property, many lenders will offer low interest rates, saving you money in comparison to an unsecured personal loan.


❌️ Property values: The amount of equity you have in your home depends on the current property values. A dip in property valuations can affect the amount of equity you have.

❌️ Repossession: If you default on your homeowner loan, your property may be repossessed.

❌️ Increased monthly outgoings: Adding another loan payment to your list of monthly outgoings may make your monthly repayments unmanageable and propel you into a debt cycle.

❌️ Long-term debt: A homeowner loan is a long-term debt that may run as long as 35 years.

Best Homeowner Loans in 2024 — Reviewed

The best homeowner loan for you will depend on things like how much you want to borrow, how much equity you have in your property, and over what period you can repay the loan. However, here are 6 of the best loans to choose from:

1. Pepper Money — Great for Borrowing High Amounts

  • Borrow from £10,000 to £1 million
  • Loan terms from 3 years to 30 years
  • Variable rate 6.5%
  • 2-year fixed rate 7.6%
  • 5-year fixed rate 8.2%
  • Product fee: £1,095
  • Early repayment fee applies

The homeowner loan from Pepper Money is a good choice if you are looking to borrow high amounts at a low interest rate.

Depending on the equity available in your property, you can borrow anything from £10,000 to £1 million, stretching the loan term between 3 to 30 years.

A product fee of £1,095 applies to homeowner loans from Pepper Money, along with early repayment charges if you decide to pay off the whole loan in full. You can pay extra instalments of your loan, however, without any fees or charges to be paid.

The interest rates offered by Pepper Money are typically low, with a variable rate of 6.5% as standard. In addition, fixed rates can be achieved at 7.6% for 2 years or 8.2% for 5 years, depending on your preferences.

2. Selina Finance — Great for a Drawdown Option

  • Borrow from £25,000 to £1 million
  • Loan terms from 5 years to 30 years
  • Fixed and variable rates starting at 7.6%
  • Product fee: £1,395
  • No early repayment fee

The Home Equity Line of Credit choice from Selina Finance is a secured loan with borrowing terms across 5 to 30 years.

You can borrow any amount from £25,000 to £1 million with this loan, depending on the equity available in your property.

You will need to pay a product fee of £1,395 to access this loan option, although there are zero early repayment fees if you decide to pay back the full loan before the loan term ends.

This loan comes complete with a drawdown option that allows you to withdraw any amount of cash as you need it for 5-year. You will be given a credit limit based on the equity in your home and you can withdraw numerous amounts within this credit limit. 

After 5 years, the total amount you have borrowed will be fixed, requiring that you pay the loan in instalments. Typical fixed and variable rates are 7.6%.

3. Shawbrook Bank — Great for Zero Early Repayment Charges

  • Borrow from £5,000 to £50,000
  • Loan terms from 3 years to 35 years
  • Variable rate 7.45%
  • 2-year fixed rate 7.95%
  • 5-year fixed rate 7.95%
  • Product fee: £795
  • No early repayment fee

Shawbrook Bank’s homeowner loan is a great choice if you want the option of paying off the full loan amount at some point without the burden of paying an early repayment charge. 

An early repayment charge is usually between 1% and 5% and can cost you a considerable amount.

With this homeowner loan, you can borrow from £5,000 to £500,000, depending on the equity available in your property. You can borrow this money on a loan term of between 3 to 35 years, tailored to suit your needs.

A variable rate with the Shawbrook Bank homeowner loan is typically 7.45%, whilst fixed rates can be attained across 2 years and 5 years at a rate of 7.95%.

Furthermore, there is no minimum income requirement for applicants applying for this loan, although you will need to pay a product fee of £795.

4. Norton Finance — Great for Lower Interest Rates

  • Borrow from £3,000 to £500,000
  • Loan terms from 1 year to 30 years
  • Rates from 6.7%
  • Product fee: £795
  • No early repayment fee

Norton Finance are experts in their field and will consider applications from people with a bad credit history or who possess CCJs. You can achieve lower interest rates if your application is accepted.

You can borrow from £3,000 to £500,000 with the Norton Finance homeowner loan, choosing to repay the money you borrow from between 1 year to 30 years.

If you proceed with this homeowner loan, you will need to pay a product fee of £795 along with interest rates in the region of 6.7%. If you choose to pay back the loan early and in full, you will not need to pay an early repayment fee, saving you a substantial amount of cash.

5. Ocean Finance — Great for a Fast Approval Process

  • Borrow from £10,000 to £250,000
  • Loan terms from 3 years to 25 years
  • Rates start at 7.6% through to 25%
  • Poor credit scores are accepted

The homeowner loan from Ocean Finance is great if you need a decision straight away.

Ocean Finance’s fast approval process will give you a quick decision as to whether you have been successful in securing a homeowner loan.

You can borrow from £10,000 to £250,000, depending on the value of equity in your property. Choose from loan terms beginning at 3 years through to 25 years, spreading the cost of your loan according to your preferences.

Interest rates for the Ocean Finance homeowner loan start at 7.6% for homeowners with a good credit rating. Interest rates up to 25% are available, however, rising according to the perceived risk and poor credit score.

6. Evolution Money — Great for Bad Credit

  • Borrow from £5,000 to £100,000
  • Loan terms from 3 years to 20 years
  • 28.96% APR Representative variable
  • Product fee: £2,095
  • Lending fee: £714

The homeowner loan from Evolution Money is tailored for homeowners with a bad credit rating.

You could borrow from £5,000 to £100,000, depending on how much you want to borrow and the available equity in your property.

If you accept the terms of the Evolution Money homeowner loan, you will need to pay a product fee of £2,095 as well as a lender fee of £714. These fees are quite high in comparison to other lenders and are usually paid in advance of the loan being accepted.

Evolution Money has tailored this loan to suit individuals with a bad credit rating. If you have been rejected by previous lenders, this loan could be for you.

However, a typical rate of 28.96% APRC Representative is applicable. The much higher rate is due to providing a loan product for individuals with poor credit scores as lenders perceive applicants with a low credit score as a risk.

The verdict

One of the best homeowner loans currently available is the homeowner loan from Pepper Money. You can borrow up to £1 million, depending on the equity available in your property, and receive very reasonable interest rates and loan terms.

Alternatively, the drawdown option from Selina Finance is another good choice, allowing you to withdraw money from your agreed credit limit as and when you need it. This is a good option if you are renovating your home and you are unsure how much you need to borrow in advance.

Whichever homeowner loan suits your circumstances, remember that a homeowner loan comes with a risk of property repossession. If you can't repay the loan it's a huge risk to take — and you could end up with your own home repossessed.

Related Guides:


What documents do you need for a homeowner loan?

Do homeowner loans negatively affect your credit score?

What is a good credit score?

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