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.
Mortgages And Remortgages Facts.
Mortgages and remortgages are two forms of what are known as home loans.
Both mortgages and remortgages are secured on residential property, and the amount of mortgage or remortgage that can be granted depends on the available equity on the property.
Equity is the difference between the value of a property and the mortgage secured on it.
To give an example of what equity in fact is, on a property valuation of 250,000 and a mortgage outstanding of 80,000, the available equity would be 170,000.
For both remortgages and mortgages lenders are no longer willing to grant 100% LTV products.
Mortgages and remortgages at even 95% LTV are thin on the ground and are only available from a handful of mortgage lenders.The availability of 90% LTV mortgages and remortgages is not common at present.
This is a huge change from the past when before the credit crunch borrowers could easily obtain a mortgage or remortgage of 100% the value of the property. There was even availability of 125% mortgages and remortgages from The Northern Rock. This fool hardy lending was naturally what contributed to the credit crunch.
However all is not doom and gloom in the mortgage market as rates available are very good with tracker remortgages and mortgages at a historic low.
What makes their repayments so low is that they follow or track the Bank Of England base lending rate which is at the historic low on 0.05%.
Tracker remortgages and mortgages are available with interest rates as low as 1.98% and 1.99% if the equity for the latter is a maximum of 70% LTV and for a maximum of 60% LTV for the 1.98% rate.
Fixed rate remortgages and mortgages abound starting at about 3%, and as such the mortgage and remortgage sector still offer attractive products.
For more information please visit remortgages
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