Should I Remortgage or Get a Secured Loan?

If you need funds for any reason, whether it’s to consolidate other debts or to fund some project such as home improvements, there are likely to be a variety of options available to you.

Property

If you’re a homeowner, your mortgage is basically a loan secured against your property. Depending on the terms of your current mortgage, and how much of it you’ve already paid off, negotiating the terms, remortgaging or otherwise exploring the alternatives to this mortgage may be a valuable option.

Remortgages

Remortgaging is done for a number of reasons, not just to obtain funds. Remortgaging your home can lower your monthly payments with better rates, or reduce the term of the mortgage. If you’re looking for funds through remortgaging, you should therefore explore whether there may be additional advantages to any remortgage deal.

Loans

A secured loan will require something used as collateral, most likely your home. In this regard it constitutes further borrowing on your property, over and above your existing mortgage. The natural disadvantage to this is that your property will be at risk if you fail to meet the payments for the loan. Another disadvantage of a secured loan as opposed to a remortgage, is that you then have two separate debts to manage, each with their own terms and potentially variable interest rates.

The Deal

Whether it’s a secured loan or a remortgage that you go for, the deal is only a good one if the terms make it worthwhile. Compare the financial impact of any borrowing thoroughly, so that you get a better feel for how it will affect you now and later.

Calculate

Remortgage and debt management calculators are available to use for free online. You can use these to your advantage by comparing a remortgage deal with a secured loan deal. Feed in the details of each, bearing in mind that interest rates may change, and see what the difference is in terms of your monthly payments (now and after any rate changes) as well as how long the lending is likely to take to pay off.

Finally, when it comes to remortgaging, remember that you don’t need to go to a new lender to do this. If you approach your current lender with your situation, explaining what the funds are needed for, they may be able to offer you a range of alternative options that best meet your interests in the long term.