Equifinance Secured Loans

Equifinance eligibility — adverse credit focus

Equifinance is designed for borrowers with moderate adverse credit. Typical accepted profile: satisfied CCJs up to £5,000 within last 24 months, active DMPs with 6+ months of clean conduct, defaults up to £2,000 within last 12 months, discharged bankruptcy over 3 years ago, discharged IVA over 12 months ago with clean post-discharge conduct. The sweet spot sits between Pepper Money’s adverse tier (lighter) and Evolution Money’s heavy-adverse tier (heavier).

Minimum age 21, maximum age at end of term 75. Minimum income £15,000 sole, £22,000 joint. Equifinance accepts self-employed income with 1 year of SA302s (2 years preferred), contractors on day rate, limited company directors using salary plus dividends or net profit. Benefits income is partially accepted — Universal Credit and PIP can supplement primary income but cannot be the sole source. State pension is accepted in full for over-65 applicants.

Property criteria: minimum value £85,000, standard construction preferred, leasehold minimum 70 years, maximum LTV 85% on clean/near-prime falling to 70% on heavy adverse. Equifinance declines ex-LA high-rise flats above 4th floor, properties with active structural issues, and properties currently used for short-term holiday letting. The firm is more property-flexible than Evolution but less so than Together Money.

Equifinance rates and a worked example

Equifinance rates start at 10.5% APR for clean credit at 65% LTV, rising to 22% APR for heavy adverse at 70% LTV. The typical customer is priced in the 13% to 17% range, reflecting the moderate-adverse core book. Rates are fixed for 2, 3 or 5 years and revert to variable rate tied to base rate plus a 7% to 9% margin. Products available in England, Wales and Scotland.

Worked example: £30,000 debt consolidation second charge for applicant with £18,000 unsecured debt and 18-month-old £800 satisfied CCJ. 10-year term at 14.99% APR fixed 5 years. Monthly repayment: £483.80. Total cost over 10 years: £58,056. Interest cost: £28,056. The applicant’s prior unsecured debt at weighted 26% APR was costing £820/month — so consolidation reduces monthly outgoings by £336. However, the term extension from average 4 years to 10 years means total interest paid is actually higher in absolute terms despite the lower rate.

Equifinance completion fee is 2.5% of advance, typically added to loan. Broker fees are separate, usually 8% to 10% of net advance on adverse cases. On the £30,000 example, total fees of approximately £3,750 mean gross loan is £33,750 but net receipt is £30,000 (or applied directly to creditors at completion). ERC structure: 5% year 1, 4% year 2, 3% year 3, 2% year 4, 1% year 5, nil thereafter. Overpayments up to 10% per year allowed without ERC.

Equifinance application process

Equifinance is broker-only. The initial soft search and fact-find is conducted by the broker before any formal submission. For adverse cases, the broker typically reviews the full credit file from all three UK credit reference agencies (Experian, Equifax, TransUnion) to identify any hidden items that could affect underwriting. Equifinance underwriters place substantial weight on recent conduct patterns — 6+ months of consecutive on-time payments improves likelihood of approval materially.

Documentation for adverse cases is heavy. Standard pack includes: 3 months of all bank statements (not just main current account), 3 months payslips or 2 years SA302s, photographic ID, 2 proofs of address within 3 months, latest mortgage statement, full list of creditors with current balances and reference numbers, DMP arrangement letter if applicable, discharge papers for any historical IVA or bankruptcy, and explanation letters for any recent adverse events.

Valuation is typically physical inspection for adverse cases — AVM is used only for the lightest-adverse profile at low LTV. RICS surveyors are appointed from Equifinance’s panel; valuation fee typically £400 to £650 payable upfront. Underwriting timelines: 3 to 5 working days for clean/near-prime, 7 to 10 days for heavy adverse requiring senior referral. Legal work handled by Equifinance panel solicitor; first lender consent via Deed of Postponement. Total timeline: typically 5 to 8 weeks from broker DIP to completion.

Equifinance vs Evolution Money vs Norton Home Loans

Three lenders dominate the moderate-to-heavy adverse second charge space: Equifinance (Shawbrook Group), Evolution Money (Cabot) and Norton Home Loans (Octane). All three accept CCJs, active DMPs and discharged bankruptcy; differences lie in specific sensitivities, maximum loan size, and pricing sharpness on particular sub-segments.

Equifinance typically has the sharpest pricing for marginal-adverse cases and the highest loan size ceiling, making it the first-choice lender for most moderate-adverse submissions. Evolution Money is often preferred for heavier adverse profiles where Equifinance’s 70% LTV ceiling is too low. Norton Home Loans is a useful third option for cases with recent bankruptcy where other lenders have declined.

Regulatory framework and consumer protections

Equifinance Limited is authorised by the FCA under firm reference 688910 for second charge mortgage lending and consumer credit. All Equifinance products are MCOB-regulated when secured on residential owner-occupier property. Standard consumer protections apply: ESIS illustration before offer, 7-day reflection period, full MCOB 11 affordability assessment, FOS complaint rights up to £430,000.

The Consumer Duty (July 2023) is particularly relevant to Equifinance because adverse credit borrowers are typically classified as vulnerable customers. Equifinance must demonstrate that its products deliver fair value — that the rate reflects the actual credit risk rather than exploiting limited alternatives, and that good customer outcomes are evident (particularly that debt consolidation genuinely improves rather than worsens the borrower’s long-term position).

Equifinance is not a deposit-taker and is therefore not FSCS-protected. It is owned by Shawbrook Group plc, which includes Shawbrook Bank (PRA-supervised deposit taker). Equifinance operates as a separate legal entity from Shawbrook Bank with its own FCA authorisation, though it benefits from group capital backing. In the unlikely event of Equifinance’s failure, the loan book would transfer to Shawbrook Bank or another regulated entity to continue collections on existing terms.

Debt consolidation structure and creditor payoff

Around 85% of Equifinance second charges are for debt consolidation. The mechanical process on completion involves Equifinance’s panel solicitor disbursing funds directly to each creditor listed on the application, using settlement figures obtained 5 working days before completion. Residual funds (after creditor payoff, fees and retention) are transferred to the borrower’s nominated account by CHAPS on completion day.

Key discipline for debt consolidation cases: all creditors being consolidated must be listed on the application, with reference numbers, creditor names and current balances. Missing creditors cause underwriting questions and sometimes decline. Once settled, the consolidated accounts should be closed (not just paid off) — leaving a paid-but-open credit card account encourages re-accumulation which is a known pattern in debt consolidation failures.

Equifinance tracks post-completion re-accumulation patterns through its credit bureau data. Internal statistics suggest approximately 18% of debt consolidation customers have accumulated £5,000+ of new unsecured debt within 3 years of completion. Customers who closed all consolidated accounts on completion show dramatically lower re-accumulation rates — around 6%. The discipline of closing accounts is the single most important behaviour for successful consolidation.

Common mistakes with Equifinance applications

Mistake one: applying just before DMP has 6 months of clean conduct. Equifinance requires 6 months of on-time DMP payments as a hard threshold. If you are in month 4 of a DMP with 2 missed payments early on, waiting to build the 6-month track record typically increases acceptance probability dramatically and can improve pricing. Your broker will advise on timing.

Mistake two: submitting to Equifinance and Evolution simultaneously. The two lenders share some underwriting DNA via their overlapping broker panels — a hard search at both within 30 days raises red flags for subsequent lenders if either declines. Your broker should prioritise the most likely lender based on case profile and only submit to the second if the first declines.

Mistake three: inaccurate creditor balance disclosure. Equifinance pulls fresh credit bureau data at underwriting, comparing stated balances to actual reported balances. Discrepancies of more than 10% typically cause referral to senior underwriter or decline for material misrepresentation. Always use current month statements or online banking balances when completing the creditor schedule — and update your broker if balances change between soft search and formal submission.

Alternatives to Equifinance

For marginally better credit profiles (satisfied CCJs 36+ months old, no active DMP), Pepper Money Pepper 36 tier may offer 2% to 3% lower APR. A 3-month delay in application while you build clean conduct often moves you from Equifinance pricing to Pepper pricing — worth modelling on the total interest saving.

For heavier adverse cases Equifinance declines (recent bankruptcy, active IVA, heavy recent defaults), Evolution Money, Norton Home Loans and Together Money are the next-tier specialists. Pricing is proportionally higher, reflecting additional risk. Each has slightly different sensitivities — a broker skilled in adverse second charge lending will know which lender fits which adverse profile best.

For genuinely distressed borrowers where affordability of any secured loan is questionable, consider non-debt-consolidation alternatives: IVA (write off 50%+ of unsecured debt over 5-6 years), Debt Relief Order (for debts under £30,000 with minimal assets), or formal DMP with StepChange/Payplan (fee-free, freezes interest on most unsecured debts). These alternatives protect the family home in ways a secured loan cannot — and are the right answer for borrowers whose problem is insolvency rather than cashflow mismanagement.