Am I Better To Apply For A Remortgage Or A Secured Loan?
If a homeowner wants to obtain finance for a number of purposes there are two real options of doing this, and these two ways are either by means of a secured loan or a remortgage.
Both remortgages and secured loans are secured kinds of loans and must be secured on property, and as such only homeowners can apply. These two loans are the same in that they can be used for almost any purpose providing that it is legal.
Which is preferable depends on several circumstances, and there are occasions depending on personal circumstances when one is preferable to the other.
Secured loans should be the loan of choice for homeowners who are in the first few years of a tie in period with their current mortgage lender. During the tie in period there is an early repayment penalty if the mortgage is repaid with a remortgage.
This can cost the homeowner thousands of pounds in charges as the penalty can be from 2% to 5% of the outstanding mortgage balance. If you have a mortgage of say 300,000, the penalty would be from 6,000 to as much as 15,000. Therefore to remortgage in such circumstances would be an act of madness, and a secured loan would be the road to take.
If the loan funds are needed quickly, again the secured loan is the better alternative, taking half the time of the remortgage to arrange, from two to three weeks for the secured loan compared to four to six weeks if remortgaging.
On the other hand if speed of payout is not relevant , and there is no tie in period a remortgage could be preferable as remortgages have a lower rate of interest, starting at interest rates of under 2% at present for those with a minimum 60% LTV in their property.
Secured loans are certainly more expensive than remortgages making the remortgage often more popular.
Therefore whether a remortgage or secured loan is better depends on the circumstances of the remortgage or secured loan applicant.
Learn more about secured loans. Stop by Champion Finance’s site where you can find out all about secured loan and what it can do for you.