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If you already have a mortgage and you’re looking for additional finance, or to protect your existing deal, remortgaging isn’t necessarily the best option. In fact, increasing numbers of consumers are looking to a secured loan as a more flexible and simple approach to restructuring finances. Many have found that a secured loan is actually a better option than remortgaging.
A secured loan is lending like any other in that you apply to a lender to borrow a specific amount and repay that, with interest, over an agreed period of time. When you apply for a secured loan you’re offering something you own as security for the borrowing – in this case your house. The lender will take a charge over it to protect its loan if you’re unable to repay. Even if you have a mortgage (often referred to as a “first charge”) on your property, it’s usually still possible obtain a secured loan (a “second charge”). You may find that some of the best lending rates for a second charge are available by applying for that secured loan with your mortgage lender, although we’d recommend you use a broker, like us, for more choice.
What you pay for a secured loan will vary from lender to lender, and depending on your credit history. As a secured loan is a “second charge” the interest rates tend to be slightly higher than those available for a mortgage. This is because the secured loan lender will only get paid after the first charge lender if there is a default and the property has to be sold to pay off creditors.
If you identify with any of the statements below then you might find a secured loan a better choice than going through the process of remortgaging.
Secured loans are proving increasingly popular – there has been a 6% year-on-year rise in new second charge business completions and 85% of mortgage intermediaries say that this type of lending is on their books. For those who are looking for fast finance, recently self-employed or keen to preserve an existing mortgage deal, a secured loan could be a far better choice than remortgaging.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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