Compare Mortgage and Secured Loan
Comparison between mortgages and secured loans.
Both a mortgage and a secured loan are charges put on a property
by a lender.
Lenders put charges on properties to ensure that they will be
able to reclaim money owed by the borrower in case of payment
default. In other words, if a borrower does not make the
repayments as agreed at the outset, the lender can sell the
property and take the outstanding loan amount plus any interest
and reasonable charges incurred.
A mortgage is a first charge on a property. Usually you
take out a mortgage with a building society or bank to purchase
a property.
Sometimes, people want to borrow more money using their house as
security. The money may be for home improvements, or to pay off
other high interest rate credit, such as credit cards, HP
or unsecured loans. They would then take out a secured loan
- this is the second charge.
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Comparison between mortgages and secured loans
 Usually
a mortgage will be at a lower interest rate than a secured
loan, because the first charge holder has more chance of
being able to get their money back if the borrower defaults
on payments.
As the interest rate is usually lower on a
mortgage than a secured loan, it makes sense to check out
whether you can borrow more from your existing mortgage
company before looking at other ways of raising finance,
such as a remortgage or secured loan. If your current
mortgage lender is willing to lend you extra money, this is
known as a further advance, and is often the cheapest
way to raise extra money from the equity in your house.
However, in many cases the existing lender may not wish to
extend more money. This may be because your circumstances
have changed since you first took out your mortgage - you
may have missed some payments, or your credit record may not
be quite as good as it was, or your lender may only be
willing to lend you money for home improvements.
Compare remortgage and secured loan
You could then look at a remortgage. This is where
you borrow money from a new lender, and pay off your
existing mortgage and raise extra money. You will then have
a new, bigger mortgage with the new lender. This can
be attractive if you get a better terms than your original
mortgage, such as a lower interest rate or a fixed
rate, but there are costs involved, and if you pay off your
existing mortgage during a penalty period, such as a fixed
rate period, you may also have to pay an early repayment
charge, which can run into many thousands of pounds.
A secured loan will enable you to leave your existing
mortgage in place - ideal if you have a low interest
rate or are in a fixed rate period - and raise extra money
by way of a second charge. Interest rates on secured
loans are usually slightly higher than on mortgages, but
they can offer greater flexibility.
You can often borrow higher amounts than
mortgage lenders allow, as secured loan lenders use a
different way of calculating how much you can afford to pay.
Secured loan lenders are also not as fussy about what you
use the money for, as long as it's legal. As long as you
have equity in your property and have sufficient income to
make the repayments, you should have no problem getting a
secured loan A
£30000 remortgage or secured loan is no problem even if you have arrears, CCJs, missed payments or
defaults. Contact us today and your personal adviser
will help work out a tailored solution for you. Apply now
for a no upfront fees mortgage, and get your finances
back on track even if you-
Ø have CCJs (County Court Judgements)
Ø have a poor credit rating
Ø have missed payments or mortgage arrears
Ø are a discharged bankrupt
Ø have had payment defaults
Ø are in an IVA (Individual Voluntary Arrangement)
Ø You’ve been turned down by other lenders in the past
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