For an extended period, various people have regarded a remortgage as an option to raise money because of the interest rates that are accessible on mortgage are less than those from unsecured finance. However, things have changed and that financial services authorities and increased regulation that has been witnessed. According to many financial experts, it would be a wise decision to use a secured loan as a financial option rather than remortgage. An example of this is when a mortgage borrower has a large redemption on their current mortgage. Lenders are not usually the same and that they all have their laws and regulations and that is why as a borrower, your penalties will occur when you decide to pay part of your mortgage during the cheap period, or you want to switch lenders.
There are some fixed mortgage rates that have a penalty of up to seven percent of the existing mortgage balance in case it is redeemed in the fixed rate phase. There are factors that you need to consider when weighing the merits and demerits of secured loans and remortgages and one of them is the overall cost of the credit. When relating different products and services, you need to use the annual percentage rate tool as it will consider the fees and take them into consideration. There are different charges when it comes to remortgage process because there are lender charges, broker fees, valuation and administration fees and also the legal fees which happens in some cases. Very few additional fees are associated with secured loans and that is different from remortgages where different charges are accrued.
As a borrower, you need to first of all compare the remortgage process and the secured loans so that you can evaluate the best financial solution. If you have a poor credit history, then you will need to have an evaluation of the whole remortgage process and the secured loans. You will end up paying a higher interest rate of the total money borrowed in case you took the mortgage before running into credit problems. A borrower will continue to enjoy their prime interest rate when they use secured loans, and the other new loan is charged differently.
There are different aspects that require being deliberated upon when deciding whether it is a remortgage or applying for a secured loan and one of them is if the additional funds can be transferrable to the borrowers account. As a matter of fact, the secured loans are always easily accessible compared to the remortgages, and that is why there is always need to make extensive comparisons.