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By Matt Fernell, Editor-in-Chief at Finance.co.uk.
Getting a loan for £80,000 is a big commitment, so it’s worth comparing quotes to find the lowest rate you can get. Here’s everything you need to know about getting the right £80,000 loan.
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So we can find loan quotes tailored to you, we just need to know:
The loan term you want
Your financial situation
Your personal details
We’ll be in touch within an hour with quotes you’re eligible for. We’ll also talk you through your options to help you find the right loan for you.
To borrow £80,000, you will need to use a secured loan. This means you’ll need to be a homeowner with enough equity in your property to cover the loan if you’re unable to keep up with your repayments.
Most lenders will also require you to be:
A UK resident
18 or older
Be employed and able to prove you can afford the repayments
We’ll only ever show you quotes that you meet the criteria for because we’ll perform a ‘soft check’ on your credit report to check your eligibility.
When you apply for a £80,000 loan, you may be asked what you want to use the funds for. Most lenders won’t specify that the funds need to be used for a specific reason, but some might. Common reasons for getting a £80k loan include:
Financing home improvements
Paying off and consolidating debts
Funding a new business
Funding a big event like a wedding
You can use the money any way you like, so you could use some to pay off debts and use the rest to carry out home improvements or buy a new car. However, some lenders won’t offer you a loan if you plan to use the money for:
Gambling or high-risk investments
Purchasing property or land
Holiday timeshares
Borrowing £80,000 is a big commitment and can cost you a lot in interest over the loan term, so make sure you definitely need the funds before getting a loan of this size.
The interest rate (APR) and the term of your £80,000 home loan will determine how much it will cost overall.
For example, to borrow £80,000 over 10 years at an APR of 8.5%, you would need to pay £978.49 a month, and the total repayable amount would be £117.419.09. Therefore, the loan would cost £37,419.09 in interest over the 10-year term.
You can reduce your monthly repayments by spreading your loan over a longer term. However, this will mean you’ll pay more in interest overall.
For example, the same loan over 20 years would be more than £300 les a month with repayments of £678.43. However, the total repayable amount would be £162,823.65, which means the overall cost in interest would be £82,823.65 over 20 years.
Things like how much equity you have in your property and your credit score can influence the APR you can get. So, if you have lots of equity and an excellent credit score, you should be offered a lower APR.
You don’t necessarily need a good credit score to get an £80k loan, but it can help you get the best possible deal. Lenders usually reward applicants with strong credit records with the lowest rates because they’re considered lower risk.
However, lenders are often more willing to offer secured loans to borrowers with average or poor credit scores because the risk is offset by using your property as collateral. They have the security of knowing they can reclaim any losses from the equity in your property if you default on your loan.
You will probably be offered a higher interest rate and less favourable loan terms if you have a poor credit rating.
It is usually possible to repay your loan before the end of the term, but most lenders will charge you an early repayment fee.
The fee you’ll be charged will differ from lender to lender, but most either charge a percentage of the remaining loan balance or one or two months’ interest. That means the closer you are to the end of the term and the smaller the remaining balance, the lower the charge will be.
If you want to be able to pay your loan back early, check the terms and conditions of the loan to work out how much it could cost.
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. It's a calculation of the overall cost of your loan and takes into account all the costs during the term of the loan, including set up charges and the interest rate. Any extra fees are added to the loan amount before interest is calculated.
The loan term you can get can vary from lender to lender, but you can usually borrow a £80,000 loan over a term of between one year and 30 years. Some lenders set a minimum loan term of three years for large secured loans.
When deciding what term you want to borrow over, remember that the shorter your term, the less interest you’ll pay overall. However, a short term means your monthly repayments will be high, so try to work out the shortest term with a monthly repayment you can comfortably afford.
It is possible to get a £80k loan if you have a poor credit history, and getting a secured loan can actually be easier than an unsecured loan when you have poor credit.
Using your property as security means the risk to the lender is reduced if you default on your loan, so they are more willing to lend you the money.
However, if you have poor credit, you will have less choice of deals and probably need to pay a higher interest rate. Find out more about getting a loan with bad credit here.
Once your loan has been approved, you could get your £80k loan in your bank account on the same day.
However, the application process for a secured loan can take a couple of weeks as you will need to supply extra documentation, including proof of property ownership and mortgage statements. The lender may also want to conduct a survey and valuation of the property before they make their decision.
Most secured loans are available with either a fixed or variable interest rate. Which option is right for you depends on your attitude to risk and what level of flexibility you want.
A fixed interest rate means your monthly repayments will remain the same for the whole loan term, and what you owe won’t change. This protects you against rising interest rates and makes budgeting your outgoings easier.
A variable interest rate, however, can go up or down in response to things like the Bank of England base rate. This means your monthly repayments can change anytime, making it harder to budget, but you could benefit if interest rates fall.
