Monday, May 30, 2011

Remortgaging Or Secured Loan?

There are many sort of loans and these can come in the form of unsecured and secured loans, but for homeowners it is sensible to use their homeowner status to borrow at low interest rates by means of remortgages and secured loans.

Secured loans and remortgages are of course only available to homeowners as they both need to be secured on property, and they are great ways for homeowners to raise money which can be spent on just about anything..

There are several matters to be taken into the equation when making up your mind that you need to obtain money for whatever reason.

Secured loans can be the method to choose if a homeowner is tied in with a mortgage deal. When someone arranges a mortgage they have to stay with the same mortgage product for a certain number of years and if they remortgage in the course of this period an early repayment penalty applies.

This penalty can be extremely high and can be many thousands of pounds in charges as the penalty is from 2% to 5% of the outstanding mortgage balance. If you have a mortgage of say 250,000, the penalty would be from 5,000 to as much as 10,000. Therefore to remortgage within a tie in period would be crazy and a low rate secured loan would be the better option.

When the money is needed in a hurry, again the secured loan is the better choice, taking half the time of the remortgage ,and secured loans take from two to three weeks compared to four to six weeks for a remortgage.

However if speed is not too important , and there is no tie in period remortgages are really better as a remortgage has a better interest rate starting at rates of under 2% at present for those with a minimum 60% Loan to value in their property.

Secured loan rates now start at around the 9% mark which is good but still more expensive than the remortgage.

However they are both excellent loans.

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