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Should you remortgage or take out a secured loan?

For my growing subscription base in the United Kingdom (over 100 visits from England alone last month), the following is a post from moneysupermarket.com, a leading British price-comparison organization specializing in financial services that includes mortgages, credit cards, insurance, travel, cell phones, and more.

If you need to secure a loan on your property, you have the option of remortgaging or taking out a secured loan. Each option has its benefits and drawbacks.  Sources such as moneysupermarket.com can provide guidance as to whether a secured loan or remortgage best suits your needs. The pros and cons listed below can be applied to your individual circumstances.

Remortgaging Pros and Cons

Pros:

The interest rates on remortgages tend to be on the low side. With the exception of people with poor credit, most individuals who remortgage will not pay excessive amounts of interest on their loan.

The debt repayment period for a remortgage may be more forgiving than that of a secured loan. Those who remortgage are granted up to 40 years to settle debts, while secured loans may involve shorter repayment terms.

Remortgages offer the convenience of a single monthly payment. While secured loans are paid off separately from the traditional mortgage payments, remortgages merely change the terms of the existing payment.

Cons:

People with a poor credit history may have a difficult time in arranging a remortgage. Lenders may not be as willing to finance money toward those with bad credit than they would toward those with a high credit rating.

The fees involved in remortgaging are typically high in several areas. When negotiating a remortgage, people should be mindful of the additional legal, administration and lender arrangement fees that are included.

Secured Loan Pros and Cons

Pros:

Secured loans are easier for people with poor credit to obtain. A bad credit history may result in increased interest rates on a secured loan, but the loan itself is more accessible than a remortgage in this situation.

Secured loans do not typically involve pay-off penalties. Unlike remortgages, which sometimes carry penalties when the loan is paid off early, secured loans can be closed out early without prepayment fees.

The process of receiving a secured loan usually moves quickly. While a remortgage can take a minimum of one month to negotiate, a secured loan is usually granted within a two to four-week period.

Cons:

Secured loans may have higher interest rates and fees than those associated with a remortgage. Closing fees are an example of fees that are not bundled in with a secured loan payment.

Secured loan payments are not included with a monthly mortgage payment. This means that the amount of money that a person repays monthly, to two separate lenders, will be higher than that of a remortgage.

If you are still uncertain in regard to obtaining a secured loan or re-negotiating the terms of your mortgage, seek advice from a financial professional.

My Own Advisor:  Regardless if you live overseas or here in North America, do you have any experience with remortgaging your home or taking out a secured loan?  I’d like to hear from you!

Filed in: Debt, Houses & Mortgages

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