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Lots of borrowers are happy with their current mortgage and their current mortgage lender but still need to raise extra funds for things. Whether you’re looking for debt consolidation, maybe some home improvements, a new car or even an investment in property… where could the money come from?
Many will consider using the equity in their home and will naturally think of a remortgage. Frequently, you will be advised that this is the best route to go. But, this may not always be the best and most cost-effective way to raise the extra funds. Below we outline a few of the many situations where a secured loan could be considered the better option for you.
What if your credit score has reduced since you took your original loan?
If your credit score has reduced since taking out your original mortgage, then remortgaging may mean taking all your borrowing to a new lender and potentially a product with a higher interest rate. You’ll pay this new interest rate on both the money outstanding on your current mortgage and the additional funds that you have raised.
The benefit of a secured loan
A secured loan means that only the additional borrowing will attract a rate that reflects your current credit score and situation and so can usually be classed as a more cost-effective situation.
What if you want to borrow the extra money over a different term than your current mortgage?
If it is your plan to borrow the additional money over a different term than your current mortgage this could prove difficult by remortgaging (though not impossible).
However, a secured loan could offer you the flexibility to set the term of the new loan at a shorter period (to attract overall less interest) or longer period of time in accordance with your personal situation and requirements.
A secured loan is simpler
A secured loan is often seen as a far quicker and easier route to raising that extra money from the equity left in your property. A secured loan tends to not have to involve solicitors, costly searches and can now in some cases avoid valuations being carried out on your property (this does vary from lender to lender).
Secured loans are also found to be easier to understand than a remortgage where a borrower can be asked to choose or be advised to consider different features and interest rates.
Cost
Secured loans can have lower set up costs than a remortgage. With remortgages you usually have to pay costs for valuations, conveyance, as well as the product fees such as administrative fees and other associated costs.
A secured loan will also avoid redemption penalties that may be charged for leaving your current mortgage lender or product early which in some cases can add up to thousands of pounds.
Conclusion
For these reasons many IFAs and Mortgages Brokers (and other professionals in the industry) are beginning to take advantage of secured loans by adding these products to their lender panels and the products that they regularly offer their customers.
Others have begun to set up business relationships to secured loan providers. They have begun to realise the importance of secured loans in their portfolio of services they can offer. There is certainly a growing acceptance of secured loans as a viable alternative to a new mortgage.
Let us help you
If you would like to look at your own options and to see if a secured loan could be a solution to your own borrowing needs, please contact us.
We will be able to quickly assess your options for a secured loan and what sort of deal you could be eligible for.
