Remortgages And Secured Loans Compared.
January 14, 2010 by John Lawson
Filed under Mortgage
There are many kinds of loans in the market place, but for homeowners the home loan products of remortgages or secured loans are the best methods of raising capital as they are the cheapest.
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.
Homeowners are tied into a mortgage for several years after the start date of the mortgage and during these years they are required to pay an early repayment penalty if they pay off the mortgage early and this can amount to thousands of pounds.
The early repayment settlement penalty is between 2% to as much as 5% of the outstanding mortgage balance,and if you are talking about a 200,000 mortgage the penalty can be from 4,000 to 10,000.Therefore if this is the situation you are in a secured loan would be the preferable choice.
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 loan rates now start at around the 9% mark which is good but still more expensive than the remortgage.
Therefore whether a remortgage or secured loan is better depends on the circumstances of the remortgage or secured loan applicant.
