Secured Loan Vs Remortgage

By: Fred Inance

Many people are happy with their current Mortgage but need to raise extra income for debt consolidation, home improvements, a car or as a deposit for a second property. These people often consider using their equity in their property and automatically think of a remortgage but this is not always the wisest and most cost effective way to do it. Below we outline a few of many situations were a secured loan may be a better route.

Your credit score has decreased since you took your original mortgage

If your credit score has decreased since taking your original mortgages then remortgaging will mean taking all your borrowing to a lender and product with a higher interest rate. You will be paying this interest rate on both the money outstanding on your mortgage and the additional funds that you raise. A secured loan means that only the additional borrowing will attract a rate that reflects your current credit situation and so usually be a more cost effective situation.

You want to borrow the additional funds over a different period than your mortgage

If you want to borrow the additional funds over a different period than your mortgage this is impossible by remortgaging. However, a secured loan would offer the flexibility to set the term of the extra borrowing at a shorter (to attract overall less interest) or longer period of time in accordance with your personal circumstances.

Simplicity

A Secured loan if often a quicker and easier route to raising extra money from the equity in your property. A secured loan tends to not have to involve solicitors, costly searches and can now in some cases avoid valuations being carried out on your property. They are also found to be easier to understand than a remortgage where borrowers are asked to choose or advised to consider features such as capped, tracker, discounted, fixed, cap and collar and overhang products.

Cost

Secured loans in most cases have lower set up costs than remortgages. With remortgages you usually have to pay costs for valuations, conveyance, broker fees as well as the product fees such as administrative fees and other associated costs. A secured loan will also avoid redemption penalties that may be charged for leaving your current mortgage lender or product which in some cases add up to thousands of pounds.

Foe these reasons IFA'S (Independent Financial Advisers) and Mortgages brokers and professionals in the industry are beginning to take advantage of secured loans and adding these products to their panel. Others have begun to set up business introductions to secured loan providers. They have begun to realise the importance of secured loans in their portpholio of services they can offer clients and there is certainly a growing acceptance of secured loans as viable alternatives to mortgages. Here we have seen a massively expanding market for secured loans over the past few years which stands as fierce and strong as ever today.

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