Why a Remortgage Will Always Be More Desirable Than a Secured Loan

If you are a home owner and need to access some extra finances, there are various different options available. Two of the best known ways of borrowing against the value of your home are a secured loan and a remortgage.

Remortgages are quite simply as they sound. It means that you are replacing your existing mortgage with a new one by switching to a new product. You can switch to a new product with your existing lender, or by transferring the loan to a new lender.

Secured loans are, like remortgages, secured on your property. However, they are normally separate from your main mortgage which means that you often have two different lenders and two different monthly repayments.

There are situations where a secured loan might be a better course of action for you than a remortgage. For example, if you want to borrow extra cash but you don't want to switch your mortgage to another lender - perhaps you have an excellent fixed rate deal on your mortgage - then a secured loan may help you. Homeowner loans are also often easier to obtain than a remortgage if you have some adverse credit or you are self employed.

In other situations, a remortgage may well be a better solution than a secured loan. Firstly, you will generally find that you pay a lower interest rate on a remortgage than you would on a secured loan. When you remortgage, the lender takes a first legal charge over your home. This means that they have the first demand on any proceeds from the sale of your property. A secured loan lender generally takes a second legal charge over your property, meaning they have to wait in the queue behind your main mortgage lender to get their money back. As there is a higher likelihood they won't recoup their money, the lending is riskier.

BY taking a remortgage, you may also be able to benefit from great deals, such as low cost fixed rate deals, discounted deals, and offset mortgages which allow you to accrue savings in a linked account to repay the mortgage more quickly. This is a great option for those who earn varied commission monthly on top of their salary.

The costs of remortgaging can also often be lower than a secured loan. You may have to pay arrangement or valuation fees for a secured loan whilst many remortgage lenders offer a deal whereby they meet the costs incurred in switching your home loan.

Applying for a remortgage instead of a secured loan will also tend to keep your finances more balanced and simpler to manage. If you decide to access a secured loan, then you will normally find you have two different lenders and two separate monthly instalments. You will need to contact with both lenders to alter any details and this can mean your finances are more complex.

When your remortgage completes you will have one loan, one payment and one lender. You don't have to waste time dealing with multiple lenders or managing several direct debits from your bank account every month.

If you own your own home and you need to borrow extra funds, a secured loan or a remortgage are the two main options. However, it is worth pausing to consider all your options before signing up for a deal and weighing up the pros and cons of each type of borrowing in order that you find the most appropriate type of finance for your needs.

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