If a homeowner wants to obtain finance for a number of purposes there are two real options of doing this, and these two ways are either by means of a secured loan or a remortgage.
Both secured loans and remortgages are loans that are secured on the equity on a property, and therefore only people who actually own their property can apply.
Which is preferable depends on several circumstances, and there are occasions depending on personal circumstances when one is preferable to the other.
Secured loans should be the loan of choice for homeowners who are in the first few years of a tie in period with their current mortgage lender. During the tie in period there is an early repayment penalty if the mortgage is repaid with a remortgage.
The early repayment settlement penalty is between 2% to as much as 5% of the outstanding mortgage balance,and if you are talking about a 200,000 mortgage the penalty can be from 4,000 to 10,000.Therefore if this is the situation you are in a secured loan would be the preferable choice.
If the loan funds are needed quickly, again the secured loan is the better alternative, taking half the time of the remortgage to arrange, from two to three weeks for the secured loan compared to four to six weeks if remortgaging.
On the other hand if speed of payout is not relevant , and there is no tie in period a remortgage could be preferable as remortgages have a lower rate of interest, starting at interest rates of under 2% at present for those with a minimum 60% LTV in their property.
Secured loans at present have interest rates starting at about 9% which is still good, but certainly not as low as the remortgage.
Therefore whether a remortgage or secured loan is better depends on the circumstances of the remortgage or secured loan applicant.
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