Tax bills
HM Revenue and Customs offers Time to Pay arrangements to many taxpayers who cannot settle in full. Check that route first; it does not involve securing anything on your home. If a payment plan is not available or would not suit, compare a secured loan with unsecured credit before deciding.
Lenders will ask about the bill and may want to see the assessment. If you are self-employed, expect the usual income evidence alongside it.
School fees
Fees recur every term, so a single lump sum rarely covers the whole commitment. Borrowing for one year's fees while the following years remain unfunded can lead to repeated borrowing. Consider the total cost across the years the fees will run and whether the schools offer payment plans.
A secured loan taken now will still be in repayment long after the fees end unless it is repaid early, and an early repayment charge may apply.
Securing a short term cost on your home
Converting a bill into a secured debt changes what is at risk. An unpaid tax bill has serious consequences, but a secured loan puts your home directly behind the debt.
Think carefully before securing other debts against your home.
Costs to compare
Ask for the total amount repayable over the term, the fees and the early repayment charge. Compare that total with a payment plan and with unsecured borrowing over a shorter period. The calculator shows how the term changes the total cost.
Before you commit
- Ask HMRC or the school about a payment plan first.
- Compare the total cost of a secured loan with unsecured credit over a shorter term.
- Check whether you could clear the loan early and what that would cost.
- Be sure the repayments fit your budget for the whole term.