As a regular homeowner, you want to find the best financial solution for you at the moment when dealing with remortgages and secured loans. For all the things that you need to know about secured loans and remortgages before making any financial move, read on. Since time immemorial, a lot of people assumed that remortgage is one of the cheapest means of raising money. They thought about this because the interest rates you get on a mortgage are far less than those you get on an unsecured loan. In the present, though, if you want to raise money, financial experts advise against remortgaging because of the increased regulation and Financial Services authority that have come about in current years. For these financial experts, there are more instances when a secure loan will be a wiser and better financial option than a remortgage.
A good example for this is when mortgage borrowers will have to deal with huge redemption penalties on their current mortgage. 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. Some mortgages with fixed rates may carry up to 7% of penalties of the outstanding balance of the mortgage if the borrower redeems it during the fixed rate period.
The overall loan cost is one of the crucial factors that you need to consider if you decide between secured loans and remortgages. A handy tool that you can use to compare between the two choices will be the APR that will also take into account associated charges and fees. 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.
According to financial experts, you can determine which of the two financial solutions bring you the most advantage when you compare the total cost of the remortgage process with secured loans. This step is very important for borrowers who have a poor credit history. For mortgages taken out before facing any credit problems, getting extra cash through a remortgage may mean paying a higher interest rate for your total mortgage. If you get a secured loan, however, you can benefit from a prime interest rate on your mortgage as a borrower. Additionally, only a non-conforming rate will be charged to you on your new loan.
When you decide between the two financial options, you also need to look into the speed by which the additional funds will be given to your account. Typically, funds for secured loans are much faster to obtain than those from a remortgage.