If you are a homeowner, and want to refinance either to simply save money or to raise funds for a major purchase, to carry out homeimprovements or for debt consolidation the two main choices are either a secured loan or a remortgage.A secured loan and a remortgage obviously must be secured against a property, and as such they are available only to homeowners.
Which of these forms of secured loans is the right choice for you depends on a number of things.
The secured loan will normally have a higher rate of inteest than a remortgage. The starting rate for this form of loan is at present about 8% APR if you are a status applicant, whereas if you have good status and a fair amount of equity you can obtain an rate of less than this, probably from about 3.5% APR .If your L.T.V. is only about 90% the rate wll be higher than this at anything from about 5% APR or probably more.
Therefore a secured loan will normally be more expensive than a remortgage if you are a an applicant with a lot of equity.Equity is the difference between the value of your home and your mortgage balance.
If you require the loan funds quickly a secured loan can usually be arranged more quickly than a remortgage.You must be given an eight day cooling off period with a secured loan, ie you are provided with a copy of your credit agreement and allowed a minimum of eight days to consider the offer before you are sent an agreement to sign, if you provide the nfo required by the secured loan lender you can have your cheque in a little more than two weeks.
A remortgage on the other hand takes upwards of four weeks to arrange.
Another consideration depends on what repayment period suits you. If you only want to take the loan over a short period such as three years, a secured loan should be preferable.
The early settlement penaly on a secured loan is very low, usually one month's interest.
A remortgage on the other hand has a tie in period which if broken can have heavy settlement penalties.
As you can see there are pros and cons with a remortgage and secured loan and which is preferable really depends on an individual's requirements.
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