Secured Loan vs Remortgage
Many people say they are happy with their current mortgage arrangements but still have a requirement to raise extra money for debt consolidation, home improvements, a new car or an investment such as another property. These people will often consider using the equity in their property and will automatically think of a remortgage or be advised to go down this route. But this is not always the best and most cost effective way to do it. Below we have tried to outline a few of many situations were a secured loan could be a better route to consider.
If your credit score has decreased since taking out your original mortgage then remortgaging will mean taking all your borrowing to a new lender and potentially a product with a higher interest rate. You will be paying this new interest rate on both the money outstanding on your current mortgage and the additional funds that you have raised. A secured loan means that only the additional borrowing will attract a rate that reflects your current credit score and situation and so usually be classed as a more cost effective situation.
If you want to borrow the additional money over a different period than your current mortgage this could prove difficult by remortgaging. However, a secured loan would offer you 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 situation and requirements.
A Secured loan can be often seen as a quicker and easier route to raising that extra money from the equity left 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 (this does vary from lender to lender). They are also found to be easier to understand than a remortgage where a borrowers can be asked to choose or advised to consider different features and interest rates.
Secured loans can have lower set up costs than a remortgage. With remortgages you usually have to pay costs for valuations, conveyance, 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 early which in some cases can add up to thousands of pounds.
For these reasons and more, many IFA’S (Independent Financial Advisers) and Mortgages brokers and professionals in the industry are beginning to take advantage of secured loans by adding these products to their lender panels. Others have begun to set up business relationships to secured loan providers. They have begun to realise the importance of secured loans in their portfolio of services they can offer to their customers. There is certainly a growing acceptance of secured loans as viable alternatives to mortgages.
If you would like to look at your own options and to see if a secured loan could be a solution to your own borrowing needs, please leave your details here. We will arrange for someone to contact you to look in to this further for you.