There is much to be discussed about remortgages and secured loans and finding the best financial solution for your kind of situation. For all the things that you need to know about secured loans and remortgages before making any financial move, read on. 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. One of the reasons why most people thought so is that interest rates that you can acquire on a mortgage are lower than those you acquire from 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. Based on what these financial experts have deduced, the better financial option these days in most occasions will be a secured loan over a remortgage.
Take, for instance, a mortgage borrower on their current mortgage facing a large redemption penalty. These penalties happen when a borrower decides to only pay off part of their mortgage during a period when rates are cheap or when they decide to switch lenders. 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.
For you to know which is the most financially sound decision between secured loans and remortgages, you have to consider the overall loan cost. 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. Borrowers who have a poor credit history can benefit from this method. If you took your mortgage before facing a credit problem, you may have to pay for a much higher interest rate for the whole mortgage if you take in a remortgage to get extra cash. On the other hand, as a borrower of secured loans, you can take advantage of a prime interest rate from your mortgage. At the same time, for your new loan, you will only be charged a non-conforming rate.
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. Mostly, you will get funds faster from secured loans than from a remortgage.