There are a number of ways in which a person can raise additional funds, two of which are remortgages and secured loans, and although they have their similarities, there are also several differences involved.
The most important connection between a remortgage and a secured loans is that they are both home loans allied to property
Both a remortgage need the security of a property, and the amount of security which leads to the maximum that can be borrowed depends on the equity.
Equity is the balance between the value of a property and the mortgage balance that is already secured on it.
Therefore if a home has a value of 340,000, and a mortgage of 200,000 secured on it, the available equity is 140,000
Before the credit crunch it was possible to obtain a remortgage of 100% of the property value and the Northern Rock even advanced 125% mortgages and remortgages.
There are now only a few mortgage and remortgage lenders advancing as much as 90% LTV products and the rate for them are fairly high at up to or even slightly more than 6%.
At 90% LTv these rates are very costly, when we consider that there are rates of less than 2% for both a mortgage or a remortgage if the applicant has a deposit of 30% or sometimes 40%.
Secured loans which like their close relative the remortgage depend on property equity have very much stricter equity margins now than they did brfore.
The equity is a maximum these days of 70% for the self employed and 80% for self employed.
There is one secured loan lender who advances homeowner loans at a maximum of 60% for self employed with no accounts who have been trading for at least six months.
These self employed loans are wonderful help to those who have found it almost impossible to get any finance at all since the credit crunch.
In spite of the few changes to secured loans and remortgages, one thing tht has remained constant is the fact that they can still both be used for a multitude of reasons, including debt consolidation.
Want to find out more about secured loans then visit Champion Finance’s site on how to choose the best remortgage for you.