Equity Is the Starting Point
Your available equity is the difference between your property's current market value and the outstanding balance on your mortgage. Lenders typically allow a combined loan-to-value (CLTV) of 85% to 90% across your mortgage and the secured loan.
For example, if your home is worth £350,000 and your mortgage balance is £200,000, you have £150,000 in equity. At a maximum CLTV of 85%, you could borrow up to £97,500 as a secured loan (£350,000 x 85% = £297,500 minus your £200,000 mortgage). Some specialist lenders may go to 90% or even higher in certain cases.
Affordability Assessment
Having enough equity is only part of the equation. Lenders must also confirm that you can afford the monthly repayments. They will look at your gross and net income, your existing mortgage payments, other credit commitments, and your regular household expenditure.
This affordability check follows the same FCA guidelines as a standard mortgage application. Lenders use stress tests to ensure you could still afford the payments if interest rates were to rise. If your outgoings are high relative to your income, you may be offered less than your equity would allow.
How Credit History Affects Borrowing
A strong credit history gives you access to the widest range of lenders and the highest borrowing limits. If you have adverse credit, some lenders will still offer secured loans but may restrict the maximum CLTV or the total amount you can borrow.
For instance, a mainstream lender might offer up to 85% CLTV for borrowers with clean credit, while a specialist lender might cap it at 75% for applicants with recent CCJs. The rate will also be higher, which reduces how much you can borrow within affordability limits.
Getting an Accurate Figure
The most reliable way to find out how much you can borrow is to speak with a specialist secured loan broker. They can assess your equity, run affordability calculations, and approach lenders on your behalf. Many offer free, no-obligation consultations.
Online calculators can give you a rough indication, but they do not account for the nuances of your individual circumstances. A broker can also identify which lenders are most likely to approve your application and at what rate, saving you time and unnecessary credit searches.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.