Helping You To Understand Secured Loans, Mortgages And Remortgages..

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Some people, although they have heard the expressions, secured loans, mortgages and remortgages, are at the same time not totally certain of what they exactly are or the differences and similarities between them.

The facts given above will hopefully help you understand better.

The main aspect that unites these three loans is the fact that they are all property related as they require the collateral of a property.

The first of these products, namely, the mortgage, is a loan that is taken out to purchase property whether it is the borrowers first property or a subsequent one.

There are not many with enough money to buy a property with their own funds.

Before the recession,mortgages were available from most lenders at up to 100% of the property value which meant that no deposit was required from the purchaser.

The Northern Rock were prepared to offer what were in fact 125% LTV mortgages but they stated that the 25% was in the form of a loan on top of the 100% mortgage.

Now however a deposit is needed of anything between 10% to 25% depending on the amount being borrowed, the credit rating of the applicant, whether they are employed or self employed, etc.

The larger the deposit supplied , the lower is the interest rates, with interest rates available from less than 2% for those with a 30% to 40% deposit.

Remortgages have all the same underwriting as mortgages, and a remortgage is a new mortgage taken out with a different provider either .to obtain a better mortgage deal with a lower rate of interest or to raise capital for a variety of purposes from debt consolidation, to paying for home improvements, holidays, cars, etc.

Debt consolidation involves rolling all outstanding credit in personal loans, etc. into the one and paying them off with a low rate remortgage which also clears the current mortgage

Therefore a remortgage is, as it says on the tin, the reorganizing of an existing mortgage and changing lenders.

Both of these are first charges that are registered at the Land Registry as such.

Secured loans, or homeowners loans as they are also called, are loans secured on the asset of a property which like remortgages can be used for most purposes,, but unlike a remortgage they are a stand by themself product that do not interfere with the mortgage.

Secured loans are a bit more expensive than remortgages, with rates from about 9%, but they are very useful if the mortgage payer is in a tie in deal that would incur a large early settlement penalty.

Hopefuly the above information will have at least, to some extent, helped people understand what these three home loans are. More information can be supplied by a secured loan or mortgage broker.

About the Author:
Champion Finance have been arranging homeowner loans since 1985. They also arrange whole of the market mortgages and remortgages. Debt help, and debt solutions of all kinds are also arranged to find debt solutions to those in debt.



Article Originally Published On: http://www.articlesnatch.com


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