Homeowners have a good means of raising funds by a remortgage or a secured loan.
A remortgage is a new mortgage taken out with a different lender.
Sometimes the borrower moves from one provider to a new one just to obtain a better interest rate without borrowing any more money, and depending on the amount of remortgage, the interest rate of the original mortgage, etc., the savings made can be hundreds of pounds each month.
On other occasions, the homeowner asks for extra funds that can be used for many different reasons, including buying a vehicle, a wedding, school or university fees, home improvements, debt consolidation, etc.
The interest rates charged for remortgages depends on many things, such as the amount required, the equity on the property, etc.
The lowest rates are available for those who have a 40% deposit, which means that for a low rate of less than 2%, the maximum remortgage available at this rate on a property worth £200,000 would be £120,000.
For a 75% LTV mortgage, the rate will be higher, until you reach a 90% LTV when the interest rate will be substantially more.
Never the less, even at 90%, when the rate may reach about 6% to 7%, it is still a very cheap way to borrow when we consider credit cards at up to 40% or more, and homeimprovement loans at about 25% when you arrange them with the firm carrying out the improvements.
Secured loans of course never replace a mortgage, as they are second charges, but apart from that aspect, they can be used fo all the same purposes as remortgages.
The interest rates for secured loans now start, as of a couple of weeks ago, at 7.9% APR, but for this rate which is the lowest since 2008, the homeowner must have 65% LTV and have a totally clean credit rating.
The minimum loan on this plan is £20,000
Other secured loans are available from £3,000 to £100,000 and sometimes more than this by referring to the lender.
Although the interest rates for secured loans is generally higher than that of remortgages, there are sometimes advantages to be gained by the former, for example if the mortgage payer would have to pay an early repaymemnt penalty if he settled the existing mortgage early. Amother occasion for secured loans being preferable, is if the applicant for the finance is self employed without full accounts or has only been trading for a short time.
Now two or even three years full accounts or similar are required for mortgages and remortgages, but self certifications or income backed up with proof of self employment and bank statements may be accepted for homeowner loans even if the self employed person has only been trading for six months.
Whether a secured loan or remortgage is better is the choice of the person himself.
Author Resource:
Champion Finance has been established since 1985. They provide whole of the market mortgages, remortgages and secured loans . Helpful, sympathetic debt advice, debt managemet, debt consolidation and all other debt solutions are also available.When looking for a secured loan, remortgage, etc. look no further than Champion Finance.
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