A personal loan is an unsecured loan borrowed from a bank, building society or other lender and repaid in fixed monthly instalments over an agreed term, typically used for things like home improvements, debt consolidation or large purchases.
Unlike a mortgage or a secured loan, a personal loan is not secured against your property, meaning the lender cannot automatically repossess your home if repayments aren’t kept up, though missed payments will still affect your credit file and could lead to other recovery action. When you’re applying for a mortgage, any existing personal loans will usually be taken into account as part of the lender’s affordability assessment, since ongoing loan repayments reduce the amount you have available each month, which can affect how much you’re able to borrow.