Need £20,000? How To Raise Money Fast, Safely

Secured loans

If you own a significant amount of equity in a property, you can use that equity to raise money via a secured loan. Equity is the amount of the property you own outright. A secured loan works by using this equity as collateral. This collateral acts as security for the lender, as they can use it to seize the property and recoup losses in the event that the borrower is unable to repay the loan.

Secured loans, also known as homeowner loans and second charge mortgages, are separate loans that do not disturb your existing mortgage. The two simply co-exist.

Are secured loans appropriate for your circumstances?

Secured loans are available to homeowners only. If you own your home, or part of it, consider these points to judge whether it could be a good way to raise money fast:

• Get up to 85% of the value of the equity you own in your home.
• Safe for secure-income homeowners needing to borrow less than half of the value of the equity they own in their home.
• Not safe for those with only a small amount of equity in their home, or those at high risk of inability to maintain payment of additional monthly costs.
• Like any loan secured on your property, there is the risk of losing your home should you fail to keep up with agreed payments.

If you do own your home, use our secured loan calculator to get an instant view of how much you’d be able to raise through a secured loan.

Unsecured loans

An unsecured loan, also known as a personal loan, is simply a loan that a lender agrees to make to you on the basis of your credit rating and your circumstances.

Because the loan is not secured with collateral, it will usually be a little more expensive. But, so long as you can afford the repayments over a short to medium timeframe (usually between 12 months and 5 years), this can be an excellent way of raising money fast.

Are unsecured loans appropriate for your circumstances?

You don’t need to own a home to take out an unsecured loan. Consider these points to judge whether it could be a suitable solution for you:

• You can borrow up to around £35k on an unsecured loan. However, what you’re offered will be governed by your credit rating, the number of months you plan to repay over, and how much you can afford to repay each month.
• Safe for people with a realistic need for borrowing, a secure income, a reasonable credit history and a responsible approach to their own budgeting.
• Not safe for those with a questionable reason for needing the money, uncertainty of their ability to keep up repayments, or poor ability to manage their own finances.
• If you default on an unsecured loan, your credit score may be adversely affected for years to come.

Remortgaging or further advance

If you do own your home, there are two other possible ways you can potentially raise money fast.

The first of these is to remortgage. Remortgaging means moving your outstanding mortgage amount from one provider to another, in order to get the best deal.

If you are at the end of the agreed term of a fixed-rate mortgage, arranging a new mortgage for a higher sum that includes the money you now need to borrow may work for you. This kind of arrangement is especially suitable where the money is to be used to maintain or enhance the property in some way.

If you are only part way through your current mortgage deal, this may still be a viable option, but you may well have to pay a significant penalty to exit your existing mortgage.

The other option to consider would be a further advance. This is similar to a secured loan, and adds a second, distinct, mortgage borrowing from your existing lender, to that which you have already.

Is remortgaging or taking a further advance appropriate for your circumstances?

You must part-own your home to remortgage or to take a further advance. Consider these points to judge whether it could be a good solution for you:

• You should be able to borrow up to a level that brings your total mortgaged equity level to 85% or even 90%.
• This should be safe for secure-income homeowners who currently have rather more equity in their property than the additional sum they now wish to borrow. It should also be safe for anyone who can significantly improve on their current interest rate by remortgaging.

Credit cards

Drawing cash on a credit card is usually an expensive way to borrow money and not one we recommend. When you take cash from an ATM on a credit card, you are effectively agreeing to a short term loan, and the fee and interest charges can both be high.

Lenders don’t look upon this favourably, because with each withdrawal not only do you incur a withdrawal fee, but you start paying interest on the transaction straight away. With debited transactions, you get an interest-free grace period until it appears on your bill. It’s often seen as a sign of poor money management to withdraw cash with a credit card.

If you find yourself paying a lot of interest on a credit card balance, you might want to consider a balance transfer card. Then you can shift your debt to another card, where you won’t pay interest for a certain number of months. This gives you a chance to pay it off in the meantime.

Are credit cards appropriate for your circumstances?

Borrowing actual cash on a credit card is almost always to be avoided. Consider these points to judge whether this could be a good solution for you:

• Withdrawing cash on a credit card is not safe at all for anyone whose finances are overstretched. Even buying using a credit card is not really safe if your credit expenditure is already overstretched or out of control.
• If your credit expenditure is under control and you are not overborrowed elsewhere, withdrawing cash on a credit card can be a last resort option. However, other methods of raising the cash should always be explored first.
• Most credit cards have a daily cash withdrawal limit of £300-£500, and a total cash limit, which is a percentage of your credit limit on that card. Spending on your card is up to your authorised credit limit.