Secured loans for landlords

The market signal landlords cannot ignore

UK landlords are leaning into secured finance to keep their investment plans moving without disturbing low-rate first mortgages. Over the past two years, secured loan volumes have climbed sharply while values have risen even faster, with quarterly advances hitting the hundreds of millions in early 2025. Awareness has also shifted. More than half of homeowners now understand secured lending, a crucial change that puts second-charge and other secured options back on the table when remortgaging is unattractive.

Two forces are shaping decisions. First, affordability is improving as buy-to-let pricing edges down, with the most competitive two-year fixes now well under two percent for the strongest profiles. Second, regulatory and market pressures are prompting spend on properties. Landlords raised close to £1.1 billion through remortgaging for improvements last year, a sign that energy and quality standards are driving capital investment. Many are choosing secured loans to fund this work while locking in their existing main mortgage.

The trend is not just about short-term opportunism. From 2020 to 2024, property owners accessed £6.5 billion of housing wealth through secured loans. That growth outpaced much of the wider mortgage space, helping landlords finance refurbishments, expand portfolios, and stabilise cash flow when rents and costs do not move in step. With sentiment surveys showing a strong majority planning to buy or upgrade in the next 12 months, secured products are filling a practical gap between flexibility and cost.

This is a cautious market too. Commercial real estate lending has softened, making relationship-led and collateral-backed borrowing more relevant. For landlords, the equation is straightforward: if releasing equity by remortgaging would mean sacrificing a prized first-charge rate, a secured loan can ringfence that rate while unlocking funds at a competitive price. The key is understanding structure, affordability, and the implications for risk and return.

Understanding APR is not just about percentages - it is about what you will actually pay over time. The right structure can protect your main rate and your cash flow.

Bottom line: secured loans have become a mainstream tool for UK landlords in 2025. Used well, they can fund improvements, acquisitions, and compliance without upending your core mortgage strategy.

Who will benefit from this approach

If you are a UK landlord holding one or more properties and you want to raise capital without refinancing your primary mortgage, secured borrowing is worth a close look. It suits owners with meaningful equity and predictable rental income who need funds for upgrades, deposits on new purchases, or short-term working capital. It also helps those balancing regulatory improvements with tenant expectations, where timing matters more than resetting an existing deal.

Portfolio landlords can benefit from faster access to capital and the ability to deploy funds across multiple assets. First-time landlords with strong equity may also find secured loans useful when their current mortgage deal is too good to disturb. If your credit history has a few blemishes, a secured loan may still be possible, although pricing will reflect risk. The right advice is essential to test affordability, tax position, and exit strategy.

The building blocks - key terms explained

• Second-charge mortgage - A loan secured against a property that already has a first-charge mortgage. It leaves your main mortgage in place.

• Loan-to-value (LTV) - The percentage of your property value you are borrowing. Lenders cap total combined LTV across first and second charges.

• Equity release - Unlocking a portion of the value you own in a property without selling it.

• APRC - The annual percentage rate of charge. A standardised way to compare the overall cost of borrowing.

• Fixed rate vs variable - Fixed locks a rate for an initial term. Variable tracks a benchmark or moves at lender discretion.

• Early repayment charges (ERCs) - Fees for repaying a loan within a fixed-rate period. Applies to many first-charge mortgages and some secured loans.

• Affordability assessment - Lenders test your rental income, expenses, and personal finances to ensure repayments are sustainable.

• Purpose of funds - What the loan is for. Common uses include refurbishments, deposits, tax liabilities, or consolidation.

• Term - The length of the loan. Shorter terms mean higher repayments but lower total interest.

• Exit strategy - How you plan to repay or refinance at the end of the term.

Your finance routes in practice

1. Second-charge secured loan on existing buy-to-let

   • Keep your low-rate first mortgage intact while leveraging equity. Useful for refurbishments, deposits, or cash flow. Pricing depends on profile, LTV, and property type.

2. Further advance from your current lender

   • Add to your existing buy-to-let with the same lender. Often quicker if eligible, but you are tied to that lender’s criteria and product range.

3. Remortgage with capital raise

   • Refinance to a new buy-to-let deal and release equity at the same time. Attractive if the new rate beats or matches your current one.

4. Secured loan across portfolio assets

   • Borrow against multiple properties to raise a larger sum. Helps professional landlords optimise LTVs and spread risk.

5. Short-term bridge with planned refinance

   • Time-sensitive purchases or heavy refurbs may suit bridging, followed by a remortgage or second charge once works complete.

Key stat: secured lending volumes and awareness are rising, and landlord demand for improvement finance has surged alongside falling buy-to-let rates.

Costs, returns, and risk at a glance

Who typically qualifies

Lenders want to see sufficient equity and reliable income. They look at the combined loan-to-value across your first and second charge, often setting a ceiling below the property’s open market value to maintain headroom. Rental income must cover the new payment plus a stress-tested buffer, and your personal income, expenditure, and existing credit commitments are reviewed. If your first-charge mortgage has early repayment charges, a second charge can be attractive because it avoids disturbing that deal. Credit blips are not always a barrier, but serious arrears or recent defaults can limit options or increase cost. For portfolio landlords, lenders may review total gearing across assets, rental void assumptions, and exposure to specific property types. They also consider use of funds, especially where works are needed to meet energy performance standards. A clear exit plan matters, whether it is refinancing post-works, sale of an asset, or repaying from cash flow.

From enquiry to funds - the steps

1. Outline your goal, amount, and timescale.

2. Share property details, mortgage statements, and rent schedule.

3. Run affordability and credit checks upfront.

4. Receive product options with costed illustrations.

5. Choose preferred route and submit application.

6. Valuation and underwriting assess property and profile.

7. Review offer, sign documents, and complete.

8. Funds released to your account or solicitors.

Upsides and trade-offs

What to check before you sign

Scrutinise the total cost, not just the rate. Fees, valuation, and legal spend can materially change the economics, especially on shorter terms. If your project hinges on rent increases, sense-check local demand and achievable rents, then stress test for higher rates at refinance. Consider regulatory timelines, particularly energy performance improvements and licensing rules that may require staged works. Map your exit strategies in order of preference and feasibility. If a remortgage is planned, check your expected LTV and rental cover after works. Finally, review covenants across your first-charge mortgage and any portfolio loans to avoid consent issues and cross-default risks.

Alternatives worth comparing

1. Remortgage your buy-to-let and raise capital if the new rate improves your position.

2. A further advance from your existing lender for a simpler process and potentially lower fees.

3. Bridging finance for heavy refurbishments or tight deadlines, with a clear refinance exit.

4. Unsecured business loan for small sums over short terms where speed is critical.

5. Equity release via sale of an underperforming asset to fund stronger opportunities.

Common questions answered

Q: Will a secured loan affect my first mortgage? A: It sits behind your first charge, so you keep that deal. Your combined borrowing must remain within lender LTV and affordability limits.

Q: How much can I borrow? A: It depends on equity, rental income, credit profile, and total LTV caps. Portfolio leverage and property type also influence the ceiling.

Q: Are rates competitive in 2025? A: Pricing has improved alongside falling buy-to-let rates, and awareness has risen. Secured loans often price below unsecured options but above prime first charges.

Q: What can the funds be used for? A: Common uses include refurbishments, energy upgrades, deposits on new purchases, tax liabilities, and cash flow smoothing between tenancies.

Q: How fast can funds be released? A: Straightforward cases can complete in weeks. Valuation, legal work, and consent requirements will drive timelines.

Q: What are the main risks? A: Your property is at risk if you miss payments. Cost overrun, rental shortfalls, and rate changes can strain affordability.

Q: Do I need consent from my first-charge lender? A: Often yes. Consent processes vary, so factor this into timelines early.

Ready to take the next step

Gather your documents, define the purpose and budget, and stress test repayments at higher rates. Speak with a whole-of-market broker who understands landlord portfolios and second-charge lending. With a clear plan and realistic timelines, you can fund improvements or acquisitions without unsettling a favourable first-charge mortgage.

Important information

This article provides general information for UK landlords and is not personal advice. Interest rates, lending criteria, and regulations change. Assess affordability carefully and seek regulated advice before applying. Your property may be repossessed if you do not keep up repayments.