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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Secured debt is borrowing backed by a specific asset, most commonly your home, which the lender can potentially claim if you don’t keep up payments. Unsecured debt, such as a credit card or personal loan, has no specific asset attached to it, so a lender can’t automatically take a possession in the same way if you fall behind, though non-payment still has serious consequences.
Understanding this distinction matters if you’re weighing up different debts, thinking about debt consolidation, or trying to understand why some debts are treated more seriously than others. It also comes up often when people are comparing options such as a debt management plan or an IVA, both of which are built around unsecured debt specifically.
What counts as secured debt?
The clearest example is a mortgage, secured against your home through a legal charge. A second charge mortgage (secured loan) works the same way, with a separate lender holding a charge behind your main mortgage. Some car finance agreements, such as hire purchase and PCP, are secured against the vehicle itself.
If you fall behind on a secured debt, the lender has a specific asset it can potentially pursue, which is why arrears on a mortgage are treated so seriously and why lenders assessing a new application look closely at any history of mortgage arrears. Support for Mortgage Interest, a government loan repayable when the home is sold or ownership transfers, is one form of help available to some people struggling with secured mortgage costs specifically, and is worth checking eligibility for on gov.uk.
What counts as unsecured debt?
Unsecured debt includes credit cards, personal loans, overdrafts, catalogue accounts, and most buy now pay later borrowing. There’s no specific asset tied to the debt, so a lender can’t repossess a particular item if you stop paying. That doesn’t mean there’s no consequence: unpaid unsecured debt can lead to a default being recorded, and ultimately a CCJ if a creditor takes court action.
| Secured debt | Unsecured debt | |
|---|---|---|
| Examples | Mortgage, second charge loan, some car finance | Credit cards, personal loans, overdrafts, catalogue accounts |
| Asset held as security | Yes, often your home or the financed item | No specific asset |
| What can happen if unpaid | Repossession of the secured asset in serious cases | Default, then potentially a CCJ |
| Included in a DMP or IVA | No | Yes |
| Effect of a court judgment | N/A, the debt is already secured | A CCJ can, in some cases, lead to a charging order making it secured against your home |
Why does the difference matter if you fall behind?
The type of debt affects how seriously and how quickly consequences can escalate. Falling behind on a secured debt puts a specific asset at direct risk, which is why lenders must follow set pre-action steps and treat repossession as a last resort, as our guide on mortgage arrears before repossession explains. Falling behind on unsecured debt doesn’t put a specific item at risk in the same immediate way, but a default or CCJ still affects your credit file for 6 years and your ability to get credit in future, including a mortgage.
Can unsecured debt effectively become secured?
Not automatically, but two common routes can bring it close. First, if a creditor gets a CCJ for an unpaid unsecured debt and then applies for a charging order, the court can secure that debt against your home, meaning it may need repaying when you sell or remortgage. Our guide on what is a charging order explains this process. Second, you might choose to remortgage specifically to pay off unsecured debts, which turns them into new borrowing secured against your home.
Why debt consolidation changes the risk
Paying off unsecured debts through a remortgage can feel like it simplifies things into one payment, but it changes the fundamental nature of that debt: it becomes secured against your home, and a longer mortgage term can mean paying more in total even if the monthly amount looks lower. This is a genuine trade-off, not something to decide on the monthly figure alone. Our page on debt consolidation remortgages sets out this risk in full, alongside the alternatives worth considering first.
What this means for a homeowner weighing up their options
If you’re a homeowner with a mix of secured and unsecured debt, it’s worth being clear on which is which before deciding what to do next. A debt management plan or an IVA deals only with unsecured debt and doesn’t automatically touch your mortgage, as our comparison guide on debt solutions compared explains. Remortgaging to clear unsecured debt is a different route entirely, one that adds to what’s secured against your home rather than leaving that debt where it is.
If you already have an IVA and are wondering how it interacts with your mortgage specifically, our guide on what is an IVA and our page on remortgaging after an IVA cover that in more depth.
Where to get help
If you’re unsure which of your debts are secured or unsecured, or want to talk through the risk of turning one into the other, free and impartial advice is available from MoneyHelper, StepChange and National Debtline before you make any decisions. They can also help you compare a debt management plan and an IVA if unsecured debt is the main concern, so you understand the practical differences before choosing a route forward.
Frequently asked questions
Is a car finance agreement secured or unsecured?
It depends on the type. Hire purchase and PCP agreements are usually secured against the car itself, meaning it can be repossessed if you fall behind, while some other forms of car finance are unsecured personal loans. Check your own agreement to see which applies.
Can unsecured debt become secured against your home?
Not automatically, but two situations can effectively achieve this: a court can grant a charging order over your home for an unpaid CCJ, or you could choose to remortgage to pay off unsecured debts, which turns them into new borrowing secured against your home.
Which is riskier, secured or unsecured debt?
Secured debt puts a specific asset, often your home, directly at risk if you fall behind, which is why lenders treat mortgage arrears so seriously. Unsecured debt doesn't put a specific asset at risk in the same way, but non-payment still has serious consequences, including CCJs and defaults.
Does a debt management plan or IVA change unsecured debt into secured debt?
No. Both are built around unsecured debts and don't turn them into secured debts. An IVA may include a clause asking you to try to release equity from your home to pay creditors, but that's different from the underlying debts themselves becoming secured.