What Is the Difference Between a Secured Loan and a Remortgage?
A refinance mortgage or remortgage can be used to refinance an existing mortgage or loan secured on property.
If a homeowner already has a good deal with their existing lender, they may not feel the need to change lenders when considering a remortgage.
Remortgages pay off the original mortgage and are used as a means of releasing additional funds.
There is some general confusion surrounding Remortgages and it's relation to Secure Loans, as a part from being a type of secure loan, Remortgages can also be used to do or buy most things.
Remortgages are a unique type of Secured Loan as they generally hold no restrictions to the amount that can be borrowed.
Other forms of Secured Loans usually have restrictions of £25,000 to £100,000.
Furthermore, secure loans do not change anything about the current obtained regulated mortgage.
The general uncertainty surrounding remortgaging often stems from the diverse options available to the homeowner.
For example, Fixed Rate Remortgages tie you into paying a set interest rate for a specified period of time and allows for effective budgeting with monthly repayments that remain stable throughout the fixed rate period.
A Tracker Remortgage is a variable mortgage whose rate is usually tied to The Bank of England base rate, whereas an Offset Remortgage is a deal that allows borrowers to offset the savings that they have against their outstanding mortgage debt.
Whilst holding the savings in a separate savings account instead of earning interest on their savings, the borrower will pay a reduced rate of interest on their remortgage.
A Bad Credit Remortgage also known as an Adverse Credit Remortgage is available if you have adverse credit history or have been refused credit in the past.
There are multiple other forms of remortgages too including Variable Rate Remortgages and Buy-to-Let Remortgages.
Therefore, it is always recommended to speak with an advisor when considering remortgaging of your home, as, with all these options available, finding the best one for you can be quite a daunting task.
The housing market was the biggest section of the economy to be hit by the credit crunch, with interest rates at their lowest over the past 19months.
The latest figures from the Council of Mortgage Lenders show that remortgaging fell to its lowest ever level as a proportion of new mortgages in August, with just 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier.
As a result of the economic downturn, capital within the housing market rapidly dried up as lenders stopped lending and removed themselves from the market.
The absence of lenders in the market left the banks in a very sorry state, having to be bailed out by the government.
Although, according to reports made in October this year, the number of remortgages jumped a massive 35% in September, implying that lenders are slowly returning to the market.
Presently, banks and building societies are reintroducing slashed interest rates, drawing in custom and making the remortgage market one of the most competitive markets today.
Remortgages now account for more business than properties, emphasising further its recent surge.
Among the advantages of remortgaging is how it can help with the consolidation of higher rate debts such as credit cards or car loans.
Similar advantages include; remortgaging to take advantage of a lower interest rate, to release equity, to pay for remodelling or expansion of your existing home or to pay for large expenses such as a child's education or wedding.
However, there are some disadvantages that must be considered if you are contemplating remortgaging your home.
For example, following the credit crunch, lenders have become increasingly stricter regarding who they lend to and how much they lend.
For this reason, lenders may be reluctant to lend if your employment has recently changed and your future income is somewhat uncertain, for example if you have recently become self employed.
Similarly, if it hasn't been that long since you obtained your original mortgage and got it at a discounted rate you may face substantial penalties for early repayment.
In order to qualify for a remortgage there are various steps to follow; your home must be valued, you must complete a detailed loan application, the lender will require conveyance work to secure a report and a solicitor will be engaged to ensure your previous lender is paid in full and to release any additional funds directly to you.
It is generally found that remortgaging your home costs much less than when you first obtained your mortgage, however this depends entirely upon the lender and your personal circumstance.
If a homeowner already has a good deal with their existing lender, they may not feel the need to change lenders when considering a remortgage.
Remortgages pay off the original mortgage and are used as a means of releasing additional funds.
There is some general confusion surrounding Remortgages and it's relation to Secure Loans, as a part from being a type of secure loan, Remortgages can also be used to do or buy most things.
Remortgages are a unique type of Secured Loan as they generally hold no restrictions to the amount that can be borrowed.
Other forms of Secured Loans usually have restrictions of £25,000 to £100,000.
Furthermore, secure loans do not change anything about the current obtained regulated mortgage.
The general uncertainty surrounding remortgaging often stems from the diverse options available to the homeowner.
For example, Fixed Rate Remortgages tie you into paying a set interest rate for a specified period of time and allows for effective budgeting with monthly repayments that remain stable throughout the fixed rate period.
A Tracker Remortgage is a variable mortgage whose rate is usually tied to The Bank of England base rate, whereas an Offset Remortgage is a deal that allows borrowers to offset the savings that they have against their outstanding mortgage debt.
Whilst holding the savings in a separate savings account instead of earning interest on their savings, the borrower will pay a reduced rate of interest on their remortgage.
A Bad Credit Remortgage also known as an Adverse Credit Remortgage is available if you have adverse credit history or have been refused credit in the past.
There are multiple other forms of remortgages too including Variable Rate Remortgages and Buy-to-Let Remortgages.
Therefore, it is always recommended to speak with an advisor when considering remortgaging of your home, as, with all these options available, finding the best one for you can be quite a daunting task.
The housing market was the biggest section of the economy to be hit by the credit crunch, with interest rates at their lowest over the past 19months.
The latest figures from the Council of Mortgage Lenders show that remortgaging fell to its lowest ever level as a proportion of new mortgages in August, with just 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier.
As a result of the economic downturn, capital within the housing market rapidly dried up as lenders stopped lending and removed themselves from the market.
The absence of lenders in the market left the banks in a very sorry state, having to be bailed out by the government.
Although, according to reports made in October this year, the number of remortgages jumped a massive 35% in September, implying that lenders are slowly returning to the market.
Presently, banks and building societies are reintroducing slashed interest rates, drawing in custom and making the remortgage market one of the most competitive markets today.
Remortgages now account for more business than properties, emphasising further its recent surge.
Among the advantages of remortgaging is how it can help with the consolidation of higher rate debts such as credit cards or car loans.
Similar advantages include; remortgaging to take advantage of a lower interest rate, to release equity, to pay for remodelling or expansion of your existing home or to pay for large expenses such as a child's education or wedding.
However, there are some disadvantages that must be considered if you are contemplating remortgaging your home.
For example, following the credit crunch, lenders have become increasingly stricter regarding who they lend to and how much they lend.
For this reason, lenders may be reluctant to lend if your employment has recently changed and your future income is somewhat uncertain, for example if you have recently become self employed.
Similarly, if it hasn't been that long since you obtained your original mortgage and got it at a discounted rate you may face substantial penalties for early repayment.
In order to qualify for a remortgage there are various steps to follow; your home must be valued, you must complete a detailed loan application, the lender will require conveyance work to secure a report and a solicitor will be engaged to ensure your previous lender is paid in full and to release any additional funds directly to you.
It is generally found that remortgaging your home costs much less than when you first obtained your mortgage, however this depends entirely upon the lender and your personal circumstance.
