Remortgage Or Secured Loan – Whats Your Best Option

Most individuals will feel more comfortable borrowing money on an unsecured basis due to the fact that in this way you are not placing your home at risk in the event of missing payments.

On the flip side however, the most competitive rates of borrowing are in fact reserved for those homeowners who are prepared to put their property up as collateral for the loan advance - This is known as secured borrowing. The lender will view these types of loan applications as relatively low risk. This is largely due to the fact that most borrowers will take any reasonable measures to ensure that the mortgage is paid on time.

A mortgage is in essence a secured loan however when referring to secured loans it is more common to be describing a second charge - A loan that is charged against your property after that of your first mortgage. The main difference between the two becomes apparent in the event of property repossession - In this instance the first charge mortgage lender will be paid of in full from the proceeds of a sale before that of the secured loan lender.

Due to this main different between the two; secured loan lending does carry a higher level of risk that first mortgage lending. This fact is evident when comparing the rates of interest between the two. It is true to say that regardless of your credit background there are remortgage products and secured loan products to suit all.

In order to ascertain whether a remortgage or a secured loan will best suit your financial needs, there are a few points that must be considered. Firstly you must ascertain whether there would be an early repayment charge applied by your mortgage lender along with the amount. This is possibly the most important consideration when deciding between the two options as it is more common to choose the secured loan route where there are early repayment charges in force however this will not always be the case. Speed of service will also be an important factor for many people. Generally speaking a remortgage application will take longer to process than that of a secured loan application.

It should also be noted that at the time of writing most residential remortgage contracts will be regulated by the Financial Services Authority however secured loans above £25,000 are currently not regulated.

The choice of remortgage products will tend to be more extensive than their secured loan counterparts. Whether you are looking for a fixed rate, discounted rate, flexible, tracker or offset. Secured loan schemes generally only offer variable rates however some lenders may be prepared to offer fixed rates.

It is always advisable to consult a mortgage professional when deciding which route would best suit your needs. The mortgage and loan market can be a confusing one for many people.