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By Matt Fernell, Editor-in-Chief at Finance.co.uk.
A loan for £100,000 can help you renovate your home, clear your debts, or make an expensive purchase - but it’s a big commitment. Here’s everything you need to know about getting a £100,000 loan.
When you get quotes with us, we check your eligibility with a range of top lenders with zero impact on your credit record. That way, you can be confident of being accepted before you apply.
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Before we can show you the lowest interest rates available to you, we just need to know:
What loan term you want
About your finances
Your personal details
We’ll be in touch within an hour to talk you through your options and with quotes for £100k loans you’re eligible for.
You’ll need to use a secured loan in order to borrow £100,000, which means you’ll need to be a homeowner to be eligible. You will also need to have enough equity in your property to cover the loan if you cannot keep up with your repayments.
Most lenders will also require you to be:
A UK resident
Over 18, or 21 for some lenders
Able to show you can afford the repayments
In employment, receiving a steady income
We perform a ‘soft check’ on your credit report to check your eligibility, which means we’ll only ever show you quotes that you could qualify for.
To work out how much your repayments will be for a £100,000 home loan, you need to know the interest rate (APR) and the loan term.
For example, to borrow £100,000 over 10 years at an APR of 9%, you would need to repay:
£1,247.83 a month
£149,739.44 in total
That means the overall cost of the loan in interest over the 10-year term would be £49,739.44
To keep your monthly repayments down, you can spread them over a longer term, but this will result in you paying more interest overall.
For example, the same loan over 20 years would be:
£877.26 a month
£210,543.16 total repayable
So, the overall cost in interest would be £110,543.16 over 20 years - over £60,000 more than borrowing over 10 years.
The APR you’re offered is determined by things like how much equity you have in your property and your credit score. That means to get the best interest rate, you’ll need to have a lot of equity and an excellent credit score.
Getting a £100k loan is possible if you have a poor credit history, but you will have less choice of deals and probably need to pay a higher interest rate.
Lenders are more willing to offer secured loans to applicants with poor credit because there is less risk compared to a personal loan.
Using your home as collateral means the loan provider has a safety net if you’re unable to keep up with your repayments. This also means your home could be at risk if you default on your loan, so you need to be sure you can afford the repayments before you apply.
Find out more about getting a loan with bad credit here.
Most lenders let you repay your loan early, but you might need to pay a fee. Early repayment charges (ERCs) apply to most loans and mortgages and compensate the lender for the interest they’ll lose out on when you repay your loan early.
How much you’ll be charged will differ from lender to lender, but it is usually based on a percentage of your remaining balance or a couple of months’ worth of interest. So, the closer you are to the end of the term and the smaller the remaining balance, the lower the ERC will be.
It can take two weeks or longer from submitting your application to getting the funds in your bank account.
This is because you will need to supply extra documentation, including proof of property ownership and mortgage statements, as part of a secured loan application. The lender may also need to get a survey and valuation of your home before they agree to lend to you.
However, you can get the funds in your account on the same day your application is approved.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
APR is short for Annual Percentage Rate, and it shows the overall cost of your loan.
Any extra fees or charges are added to the loan amount before APR is calculated.
It's a legal requirement for credit lenders to show their APR so an easy and fair comparison of interest rates can be made between lenders.
If you don’t think you’ll be able to repay your loan, contact the lender as soon as possible. They could be able to help by working out a new repayment plan you can afford or authorising a payment holiday to give you some time to get your finances back on track.
You will probably face late payment fees and interest if you miss your repayments without telling your lender. It will also harm your credit rating and could put your home at risk if you have a secured loan.
Most secured loan lenders offer terms of anything between one year and 30 years, but some may set a minimum term of three years for large loan amounts like £100,000.
Remember that a shorter term means your monthly repayments will be high, but you will pay less interest overall. That’s why it’s worth working out a loan term based on the maximum amount you can afford to repay each month.
Most lenders don’t offer personal loans for more than £25,000, so it’s very unlikely you will find a lender willing to lend you £100,000 on an unsecured basis.
Personal loans are considered riskier to lenders because there is no security if you cannot make your repayments. For this reason, most loan providers don’t offer large unsecured loans.
It is possible to borrow £100,000 if you’re looking to grow your business or improve your cash flow.
To get a £100k business loan, you will probably need to secure the loan against one of your assets, like a commercial property or your own home.
Once you receive the funds, you can use your loan however you like, but common reasons for getting borrowing £100k loan include:
Making major home improvements
Consolidating debts expensive debts
Unexpected bills
Starting a new business
Funding a big event like a wedding
There are some things most lenders won’t offer you a loan for, including:
High-risk investments
Gambling
Buying property or land
Holiday timeshares
A £100,000 loan will cost a lot in interest over its lifetime, and you will be putting your home at risk if you cannot keep up with your repayments. Therefore, it’s worth thinking about whether or not you really need the money before you apply.
