Remortgages And Secured Loans Compared.
February 17, 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.
These two loans are of course only available to homeowners as they are both secured on property, and they are both excellent methods by which homeowners can raise finance which can be used for many purposes.
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.
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 additional finance is required in a hurry, yet again the secured loan would be more suitable, as the secured loan can pay out in under three weeks with remortgages taking four weeks or very commonly six weeks to pay out.
If neither of the previous statements apply to you a remortgage could well be preferable as the interest rates for a remortgage are normally lower. At this moment in time if the homeowner has at least a 40% deposit interest rates of under 2% are currently available.
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.
