by Susan Paige
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)