How to Decide Between a Secured Loan or a Remortgage

When you purchase a home, you are investing time and money into a property hoping that you will see an increase in the property, and a better return on your investment. Many times during the course of your mortgage, there may become a point where you choose to borrow against the value of your home.


In this case, there are two different options – remortgage your home, or take out a secured loan. How to choose between the two can be challenging. By following the steps below, you may gain a better understanding of what option is best for your circumstance.


1. Research what the costs and set up fees are associated with each option. The main difference between a secured loan and a remortgage is the start-up cost. If you choose to go with a new lender, you may incur start-up charges, legal fees, and more. These fees will be typically be associated with a remortgage, not a secured loan. However, keep in mind that each lender has specific terms they offer borrowers.


2. Talk to your current lender to see if there are penalties or fees for leaving their lending services. When you initially received your mortgage, you may have signed into a fixed rate or a discount. If this is the case, should you choose to remortgage with a new company, your current lender may charge you early repayment charges to pay off the loan you have with them.

When you choose to utilize a secured loan, you will not be charged early termination frees, and will not have to pay off your existing mortgage to borrow against your home equity. You simply have a second loan with a new lender.

3. Speak to a financial advisor and see if your personal circumstances will allow for a remortgage. To take advantage of a remortgage, you will have to go through the lending process. This means an underwriter will take into consideration your income, debt ratio, and pull your credit report. If you are concerned about your credit score, a remortgage may not be the right option. Consulting a financial advisor to learn the best options for your financial situation.

At 1st UK Mortgages, we have a team of experts waiting to assist you with your mortgage needs. Our lenders will review options regarding secured loans and remortgages to help you decide which options is suitable for your financial needs. Visit our website to learn more.



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