Secured Loans And Remortgages Can Even Be Used As Consolidation Loans

June 25, 2011 by  Filed under: Debt 

Most homeowners have heard of secured loans and remortgages, and also have basic knowledge about these loans, believing them to be a way by which homeowners can borrow money.

However many know very little more than this, and when they need money they are unsure of whether a remortgage or a secured loan is better for them, what interest rates they both have, or how to proceed to make an application.

The fact is, that there are many similarities between remortgages and secured loans, and which one is better depends on a person’s own particular circumstances.

The major feature that secured loans and remortgages have in common is the fact that both need an asset to form security for the loan, and in the case of these two homeowner loans, the asset required is normally the property in which the borrower lives.

Some secured loan and remortgage lenders do however grant their products to owners of buy to lets, second homes etc.

Secured loans are available from £5,000 to £100,000, although certain lenders have a minimum value of £10,000 or even £20,000 in some instances, and it all depends on the available equity.

Equity is the sum that remains when the mortgage balance is deducted from the property value.

Remortgages can be for any sum what so ever, providing there is sufficient equity, but there are some mortgage lenders who do place a limit on the maximum mortgage that they will advance.

Many mortgage lenders will only grant remortgages up to 75% loan to value when the remortgage is being used for debt consolidation.

On most occasions however, remortgages up to 90% are now available.

The rates for remortgages vary considerably with the most important element being the equity available, with rates available from as low as 1.65% at 60% LTV.

Some remortgages are taken out with the sole purpose of getting a better mortgage deal, but on other occasions additional funds are requested to provide extra cash for almost any purpose, from buying a car, paying for wedding, debt consolidation or even for buying another property.

As a remortgage is nothing but a new mortgage arranged by a different lender, like mortgages they are registered as a first charge.

While secured loans can also be used for almost any reason, including being used as consolidation loans loans, they never replace the exsisting mortgage, but stand alone ranking as a second charge.

If a homeowner is in a tie in period with his mortgage, and settling the mortgage earlier would result is a large earlier repayment penalty, a secured loan would most likely to be the better alternative.

The best advice that can be given to any homeowner contemplating borrowing money is to go to a mortgage or a secured loan broker who can provide him with all the information and arrange everything for him.

Champion Finance have been established since 1985 and they offer secured loans and whole of the market remortgages and mortgages in addition to debt consolidation, debt advice and every form of debt solution.

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