Quick answer
Before signing a private secured loan, ask what the loan costs in total, how and when interest is charged, what happens at maturity, what counts as a default and what it costs, whether you can repay early without penalty, and what security and guarantees you are giving. Have your own solicitor review the documents and confirm the answers in writing.
Key points
- Ask for the total cost over the expected term, not just the headline
- Understand prepaid, capitalised and monthly interest
- Know the default triggers and what they cost
- Check early repayment and discharge costs
- Get your own legal advice before signing
Why the questions matter
Private secured loans are flexible, quick and built around property rather than paperwork. That flexibility is valuable, but it also means terms vary widely from lender to lender. Two offers that look similar on the surface can produce very different outcomes if the exit slips, the property takes longer to sell or you want to repay early. Asking the right questions before signing is the simplest way to avoid surprises.
Use this list alongside our guide to reading indicative terms.
About cost
What is the total cost over the expected term? Ask for a figure that includes interest, establishment fees, legal fees, valuation or assessment costs, and any line fees or monthly charges. Then ask for the same figure if the loan runs three months longer than planned.
Which fees are payable even if the loan does not proceed? Some lenders charge for legal work or valuations up front. Know what you are committing to before you sign an acceptance.
Who pays the lender’s legal costs? In private lending, the borrower usually pays. Ask for an estimate.
About interest
Is interest prepaid, capitalised or paid monthly? Each structure affects your cash flow differently. Prepaid interest is deducted from the advance at settlement, capitalised interest is added to the balance, and monthly interest is paid as you go. Our guide to prepaid versus capitalised interest explains the trade-offs.
If interest is prepaid and I repay early, is any of it refunded? Policies differ. Some lenders refund unused prepaid interest, while others retain a minimum period.
About the term and maturity
What happens at the end of the term? Find out whether the lender offers extensions, what they cost and how much notice you need to give. Ask what happens if you need an extra month or two because a sale or refinance is running late.
Can the lender call the loan early? Some documents allow the lender to demand repayment in certain circumstances, even if you are not in default. Understand those circumstances.
About default
What counts as a default? Missing a payment is obvious. Less obvious triggers include failing to maintain insurance, falling behind on council rates, a change in company directors, or another creditor taking action. Read the default clause with your solicitor.
What does a default cost? Many private loans carry a higher default interest charge and enforcement costs. Our guide to default clauses and default interest covers what to look for.
About early repayment
Can I repay early, and what will it cost? Some loans have no early repayment cost, while others have a minimum interest period or a fee. If your exit could arrive sooner than expected, this matters. See early repayment and discharge.
How long does a discharge take? When you refinance or sell, the lender needs to provide a payout figure and sign a discharge. Ask how much notice it needs.
About security and guarantees
Exactly which properties and assets will be secured? Some lenders take a general security agreement over the business as well as a mortgage. Know everything you are giving.
Who needs to sign a guarantee? Directors are usually asked to guarantee a company loan. If third-party property is involved, its owner will also sign. Is any guarantee limited or unlimited?
Can security be released as the loan reduces? If you are offering more than one property, ask whether one can be released after a partial repayment.
About the lender
Who is the lender, and who will manage the loan after settlement? Know who you will deal with if something changes during the term.
How will the lender communicate if a problem arises? A lender that talks early about issues is far easier to work with than one that sends a default notice without warning.
About the process
What do you need from me, and by when? Ask for a complete list of documents and conditions so there are no late requests that push settlement back. Typical items include identification, company searches, rates notices, existing loan statements and evidence of the exit.
Is a formal valuation required before approval? Many private lenders rely on their own assessment and do not need a valuation before approving, which can save time. Others order one for larger loans or unusual property. Know which applies and who pays.
When can the loan realistically settle? Ask what the lender’s typical timeframe is once documents are signed, and what could delay it, such as discharge of an existing loan, consent from a first mortgagee or registration delays. If you have a hard deadline, say so at the start.
About changes during the term
What if I want to sell or refinance part of the security? If you offered two properties, you may want to sell one during the term. Ask how partial releases work and what amount must be repaid to release each property.
What if my circumstances change? Directors may leave, the business may restructure or a new opportunity may arise. Ask how the lender handles changes and whether its consent is needed.
Get the answers in writing
Verbal assurances do not help much if a dispute arises later. Ask for key answers by email, or make sure they are reflected in the loan documents. Your solicitor should read the final documents against the answers you were given.
A final check
Before you sign, ask yourself whether your exit works even if it takes longer than planned or delivers less than expected. If the answer is no, consider a longer term, a lower loan amount or a second exit option. Our guide to planning for the first exit slipping can help.
Getting started
When you are ready to explore options, check your eligibility with no credit check. We will help you understand the likely structure, so you can ask these questions with confidence when an offer arrives.
Start your enquiry whenever suits.
Frequently asked questions
Should I have my own solicitor?
Yes. A solicitor acting only for you can explain the documents, flag unusual clauses and confirm the security you are giving. Many lenders require it.
What is the most overlooked cost?
Default and extension costs. Borrowers focus on the standard terms and overlook what happens if the exit slips by a few weeks.
Can I negotiate the terms?
Sometimes. Term length, release provisions and early repayment terms are often more flexible than pricing. Raise questions before you accept the offer.
How long should I take to review documents?
As long as you need to understand them, but plan ahead. If timing is tight, ask for draft documents early so your solicitor can start reviewing.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.