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When Are Secured Loans Better Than Remortgaging?

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Remortgaging can be an effective way of borrowing significant sums of money against the value of your home. However, there are instances in which it may be worth considering a secured loan as a more accessible and cost-effective alternative.

What are secured loans?

Any loan that is issued against the value of an asset of any kind is considered a secured loan. The most obvious example of which being a mortgage, which is secured against the value of the borrower’s property.

Depending on the size, nature and intention for the loan, interest rates and overall borrowing costs can vary wildly. Nevertheless, there are several instances where opting for a secured loan could prove beneficial.

Examples of which include:

When the money is needed as quickly as possible

One of the inherent disadvantages of mortgage and remortgage products in general is the time and effort it takes to organise them. Depending on the type of secured loan you choose, it’s possible to get your hands on the money you need in a matter of days. Bridging loans in particular are incredibly quick to organise for those who qualify.

When you have limited or no proof of income

There are various specialist secured lending products available that don’t take into account the applicant’s proof of income. Instead, it’s simply a case of providing the necessary collateral to cover the cost of the loan. Again, bridging finance is an example of a secured loan that can be accessed with little to no proof of income required. Often easier to obtain and more cost-effective than a remortgage.

When you have an imperfect credit score

A strong credit history is typically a prerequisite with the vast majority of traditional mortgage lenders.  Hence, you’ll be counted out of the running if you have a less than perfect credit score. As with proof of income, it’s not always necessary to undergo a credit check to qualify for a secured loan. Specialist lenders focus exclusively on collateral and security, rather than the technicalities of the more traditional loan application.

When you need to access a larger amount of money

It’s not unusual for mortgage and remortgage products to be relatively limited in terms of loan-to-value percentages. You may be able to borrow up to say 60% of your property’s value, but no more. Depending on the type of secured funding solution you choose, it may be possible to tap into up to 95% of your property’s value. A good credit history and proof of income can help increase the amount you’re able to borrow, which may also be affected by the nature of the property used to secure the loan.

When you’d prefer more flexible repayment options

Last but not least, specialist secured loans open the door to a limitless range of flexible repayment options. If it suits your needs, short-term secured funding could be repaid in full in a matter of months to minimise borrowing costs. Rather than being tied to the terms and conditions set out by the lender, there’s far more flexibility with a specialist secured loan.

With such an array of options available, it’s important to seek independent financial advice before making your final decision.

(This article was provided by iConquer)


Hope’s Debt Update – March, 2019

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I have been writing here at BAD for over 5 years now! Can you believe that? I can’t!

This was my first ever post which included my first ever debt update. It was published in February, 2014. My total debt was $78,518!

And without further ado, here is my current debt load.

Creditor
Balance

(as of 10/14/17)
Interest
Min. Payment
Student Loans$34,9912.88%$0 (income based deferment)
Car$4,7737.00%$400
Credit Card$2,43417.00%$60
Collections 3 (Ex-husband)06.25%$0
Collections 2 (Apartment)$499$0
Total$42,697$460

Total Debt as of 3/13/2019 is $42,697

My last debt update is HERE if you want to compare the two, it was published in December, 2018.

I’ve got to admit, comparing my first ever debt post and today’s was a bit discouraging, especially when I compare myself to the headlines of others debt pay off journeys. But I won’t make excuses.

I do know that I have come a long way as far as mindset over the 5 years. Not to mention knowledge. And I am in a really good place as far as payoff mindset (finally, right, long time readers!)

The Plan

I haven’t put a lot of thought into my plan of action. Frankly, I haven’t had time to sit down and think about anything.

But in looking at my numbers, this is what I have in mind:

  • Pay off credit card! It’s time. The interest rate. I’m ready.
  • Pay off the non-interest bearing collection account because it’s not affecting anything but my credit at this point.
  • Pay off my car (if I stick to my $400 per month, it will be paid off in March, 2020 but it would be great if I could do it more quickly.)

In my dream world, I would love to have all three of these debts paid off by the end of the year. And I think it’s doable looking at my year as a whole.

Thoughts? Feedback?


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