How to get a £40000 loan?
There are a range of finance options available to those looking to take out a £40000 loan.
Sifting through different loans and trying to figure out which one is right for you can often be overwhelming.
Homeowner loans (secured loans), which sit behind your mortgage as a second charge, are typically the most popular loans among those taking out loans of £40000.
How much does a £40000 loan cost
This will depend on your circumstances, but assuming you have an excellent credit score, then you could qualify for a market leading loan rate.
Loan Repayment Example based on £40,000
Let’s work through the example of a loan of £40,000 taken out over 15 years (180 months) with an annual APR of 6.1%. We’ll determine the monthly repayments, including both capital and interest.
Loan Details
- Loan amount: £40,000
- Annual Percentage Rate (APR): 6.1%
- Loan term: 15 years (180 months)
Steps to Calculate Monthly Repayments
- Convert the annual interest rate to a monthly interest rate:
\( r = \frac{6.1\%}{12 \times 100} = \frac{0.061}{12} \approx 0.00508 \)
- Determine the number of monthly payments:
\( n = 15 \times 12 = 180 \)
- Plug the values into the formula:
\( M = P \frac{r (1 + r)^n}{(1 + r)^n – 1} \)
Where:
- \( M \) is the monthly repayment
- \( P \) is the loan principal (initial amount)
- \( r \) is the monthly interest rate (annual rate divided by 12)
- \( n \) is the number of payments (loan term in months)
- Calculate step-by-step:
- \( (1 + r)^n = (1 + 0.00508)^{180} \approx 2.074 \)
- \( r (1 + r)^n = 0.00508 \times 2.074 \approx 0.0105 \)
- \( (1 + r)^n – 1 = 2.074 – 1 = 1.074 \)
- \( M = 40000 \times \frac{0.0105}{1.074} \approx 40000 \times 0.00978 \approx 391.20 \)
Monthly Repayment
The monthly repayment is approximately £391.20.
Summary
If you take out a loan of £40,000 over 15 years with an APR of 6.1%, your monthly repayment would be approximately £391.20. This amount includes both the repayment of the loan principal and the interest. Over the 15-year period, you will make a total of 180 payments.
Calculations are based on the interest rate being fixed over the term and no repayments are missed.
Can I Get a 40000 Personal Loan?
Unsecured personal loans are generally easier to obtain than other forms of financing. Due to the loan’s unsecured nature, no collateral is required (such as your home).
Most banks and other lenders offer personal loans, and you can borrow between £1,000 and £25,000 over a relatively short period of time (compared to secured loans).
Only a few lenders are willing to offer £40000 loans on an unsecured basis, since personal loans are typically smaller than secured loans. As a result, many borrowers look towards secured loans when looking to borrow loans of this size. Lenders that do offer unsecured loans at this level will normally require you to bank with them e.g. Natwest and RBS.
Can I get a £40000 Secured Loan
Secured loans are loans secured by property and will sit as a second charge loan behind your first charge mortgage. In recent years, secured loans have become increasingly popular among homeowners due to their lower interest rates.
In addition, secured loans are also viewed as more risky, as if you are unable to repay your loan, your home can be forfeited. When taking out larger amounts of money, homeowner loans are usually preferred.
The amount you can borrow, the rate of interest, and the term of the loan are likely to depend on your personal circumstances, market conditions, and the amount of equity you own in your home. Providing the loan is not illegal or for commercial purposes, secured loans can be used for almost anything.
If you are a homeowner and have equity in your home and you have an existing mortgage, your chances of securing a secured or second charge mortgage for £40,000 will depend on your income and credit profile. Use our secured loan calculator to see if you qualify for a £40k secured loan or complete our enquiry form and we can discuss whether this will be possible.
Can I Get a £40000 Business Loan?
If you are a business owner sourcing finance is typically done on the trading record of the business. Lenders will look at your annual accounts and typically the last 3 to 6 months bank statements in assessing whether they will lend. Unsecured business loans will still often require a director of the business to provide a personal guarantee. Use our loan service to see if your business qualifies for a £20000 business loan. Repayment terms range from 3 months to 5 years.
Can I Get a £40000 Bridging Loan?
Bridging loans are secured on property, and most lenders in the UK will have a minimum loan size of £25,000, with many starting at £50,000. So for a bridging loan of £20,000 your options may be limited but talk to a specialist bridging loan broker to see if this option is right for you.
Considerations before taking out a £40000 loan
Generally speaking, there is no right or wrong loan option when taking out a £40000 loan.
However, depending on your personal circumstances, some options are likely to be more suitable for your needs than others. Before committing to a loan we strongly recommend that you compare the market in looking at your loan options.
We provide a loan calculator on this site. For secured loans, business loans and bridging loans you should speak to a qualified loan broker who can evaluate your situation and provide you with unbiased, expert advice to make the right decision for you.