Priority Debt: Secured Loan

What is a secured loan?

A secured loan is a loan that is tied to something you own, usually your home. If you stop making payments, the lender has the legal right to take and sell that asset to get their money back. This is what makes it a priority debt.

A secured loan is usually a second loan on top of your existing mortgage. If you are struggling to keep up with payments, it is important to get advice quickly because your home could be at risk.

What happens if you fall behind

Your lender cannot repossess your home straight away. There is a legal process they must follow, and you have rights at every stage:

1. Initial default

If you miss payments, your lender will send you a notice of arrears (usually after 2 missed payments) and a default notice (typically after 3-6 months of missed payments).

2. Communication and negotiation

Your lender is required to contact you to discuss repayment options before taking further action. These may include extending the loan term or reducing your payments.

3. Formal letter before action

Your lender will send a formal letter stating the amount you owe and giving you a deadline to pay or face legal action.

4. Court action (CCJ)

If the debt remains unpaid, your lender can apply to the court for a County Court Judgment (CCJ) to legally confirm the debt.

5. Repossession and sale

If the debt is still unpaid after the CCJ, your lender can apply for a court order to repossess the secured property and sell it to cover the loan, interest, and costs.

If you are behind on payments or worried about your home, contact us as soon as you can.

Get help

• Email us at info@youthlegal.org.uk
• Call us on 020 3195 1906
• Fill in our contact form and we'll get back to you

All our advice is free and confidential. You can also check your options at Shelter or Citizens Advice.