As a regular homeowner, you want to find the best financial solution for you at the moment when dealing with remortgages and secured loans. Differentiating between secured loans and remortgages so you can figure out the most suitable financial solution for you is what this article strives to do. For the past couple of years, many homeowners who wanted to raise some money think that the best way to so do is through a remortgage. They thought about this because the interest rates you get on a mortgage are far less than those you get on an unsecured loan. Unfortunately, many financial experts advise against remortgaging today to raise money because of the changes brought about by the Financial Services authority and increased regulation. According to these financial experts, you will fare better in terms of your finances in majority of occasions when you choose a secured loan option.
Take, for instance, a mortgage borrower on their current mortgage facing a large redemption penalty. Penalties are earned by the borrower when they intend to switch lenders or only wait for a cheap rate period to pay off a portion of their mortgage. Keep in mind as well as that the terms and conditions between lenders are not similar. Your penalties can go as high as 7% of your outstanding mortgage balance from you fixed rate mortgage if you get them during the period of fixed rate.
The overall loan cost is one of the crucial factors that you need to consider if you decide between secured loans and remortgages. If you want to compare between these two financial options and take associated charges and fees into account, then the APR is the perfect tool for you. When it comes to processing remortgages, a lot of fees are involved in the process such as broker fees, lender fees, administration and valuation fees, and even legal fees. With secured loans, on the other hand, you only have very few additional fees, which may include a broker’s fee and the lender’s arrangement fee.
Comparing between the costs of secured loans and total remortgage process costs is the most effective method of assessing which is the best financial solution for your case according to financial experts. Taking this step is crucial for any borrower with a poor credit history. Most of the time, you will be paying an interest rate that is significantly higher for your entire mortgage when you decide to raise extra money through a remortgage after you have taken out your mortgage before getting into any credit troubles. On the other hand, as a borrower of secured loans, you can take advantage of a prime interest rate from your mortgage. Additionally, only a non-conforming rate will be charged to you on your new loan.
It is equally important to consider the time it will take for the additional funds to go to your account when you weigh between the two financial options. Generally, you can get funds from secured loans much faster than a remortgage.