In case you didn’t know, there are two basic ways to secure a home loan with collateral. The first way is to get a secured loan type. The second method involves remortgaging the property that is already under a mortgage. In this article I’m going to show you why taking a secured home loan can actually be the better option.
The first thing that you should consider is the interest rate. The cold, hard truth is that secured loans can actually attract a lower interest rate. You can check kiwimoney kiwimoney, one of the leading UK loan lenders to see for yourself. Interest rates vary, but are always lower. They can vary based on your own credit history. Some other risk factors include the current employment and the number of family members. Also, you should also consider that the Bank of England adjusts the base interest rate over the period of time, which makes remortgaging very risky, because, as a result, their interest rate fluctuates a lot.
Remortgaging does have its own benefits, don’t get me wrong. I would even go so far to say that remortgaging is a better option for those people out there who don’t want to go into another debt, but rather want to improve their financial situation. How? Well, it’s simple: remortgaging can provide you with reduced expenses if you manage to get it while the interest rate is lower than then actual mortgage rate.
One thing that will definitely put you off is the fees known as early redemption charges (ERC). They are imposed by the lenders because they want to protect their own capital because they will lose their earnings if the borrowers decide to remortgage. That’s why you should always seek out legal help if you decide to remortgage; ERCs can really cause a lot of financial pain, because they are just a penalty for paying off the existing charges too early. The simple reason why I’m calling them a penalty is because you will lose money to lenders who lose a customer, so they just want to protect themselves.
How can you know if the secured home loan will actually be better for you? Well, you simply have to sit down and put your expenses on the paper. If you think that you can pressure your household with a new loan, I would definitely take it. Keep in mind that there are some other options too (such as bank overdraft or a zero percent credit card), but these options are only viable for small sums of money.
Interest rates are always lower with secured loans, because you’re putting your property out there as a measure of security, while the case with remortgaging is that your property is already under the mortgage, so the interest rates are actually going to be a lot higher.
Finally, I would advise you to consider this one important fact: these days it is a lot easier to get a homeowner loan than it was before. Major lending companies online provide you with a fast solution. While it may take days or even months to remortgage your property, some of the best companies (like Apple Loans) can set you up with the cash in a matter of minutes (45-60 minutes tops). Also, since you’re taking a secured loan option, the repayment period will make it easier for you since the monthly payments won’t pose so much pressure.
The Biggest Differences Between A Second Mortgage And A Secured Home Loan
These days, when it is not as easy to get credit as it once was, it is very important to know the differences between various types of lending.
One great option for homeowners is a secured loan. Today, we’re going to talk about the major differences between secured homeowner loans and second mortgages. So, let’s start right away.
One of the biggest advantages is the fact that you can borrow larger sums of money. This means that, while you can usually get up to £25,000 with an unsecured loan, the amount of money that you can borrow if you decide to secure it, can be up to £500,000.
This also means that you should only consider getting a home loan if there is something very important in your life in which this is needed. Because of the high risk that these types of loans carry in themselves, you should avoid using them for common purposes, such as college financing.
The other advantage is that, unlike the remortgaging plans, secured loan plans generally allow you to repay that money in a longer time frame. We’re talking about 3-15, or even 20 years. One great company that allows you bigger time frames is Apple Loans; you can check them out at www.appleloans.co.uk. They allow you to repay your loan over 25 years (with 5 years being the bare minimum).
Now we come to interest rates. You should know that interest rates are much lower on secured loans, than they are with remortgaging plans. One other huge advantage of the secured loan is the fact that you won’t need to pay any upfront fees whatsoever, which is not the case with remortgaging, since they will oftentimes impose some balloon and upstart fees. However, you should always check out your options. Don’t just settle in with the first company that you come by. You can actually lower your rates by conducting research on your own. Bear in mind that different companies have different terms, so your final interest rate is going to depend on many factors such as the amount that you want to lend, your credit score history and the repayment time.
This brings me to my next point: credit score. Credit score isn’t that important when taking a secured loan, because the creditors are already secured with your property. There are some perks that you get if you have an above average credit score, but the fact of the matter is that it really doesn’t matter that much. Even people who have terrible credit scores can get a loan quite easily, especially from online companies such as Apple Loans. Their penalty? Maybe they will have to pay around 10-20 pounds more every month. On the other hand, people with terrible credit score should not even think about getting an unsecured loan or a remortgage, because they will get rejected 100% of time.
It’s a completely different story with remortgaging. This process is also known as second advance, because you are basically increasing your existing mortgage. This option is obviously only viable for people who are owners of valuable real estate. The problem with this system is that they charge you with set up fees, and the interest rate is different than your original mortgage, which might be confusing for some people. That’s why you should consider getting legal help here, whereas you probably don’t need anything except smart brains to pull off a successful secured loan campaign.
In the end, I think that it is always a better option to get a secured home loan instead of the unsecured one or a second mortgage. It is easier to get, and the interest rates are much lower in the short-term. Long-term they are easier to repay on a monthly basis.