An alternative to remortgaging?
Added: (Thu Jun 02 2005)
Pressbox (Press Release) -
It has been reported recently that secured personal loans and second charge loans are being overlooked as an alternative to remortgaging
Secured, second charge loans are being overlooked by brokers as an alternative to remortgaging, according to specialist broker Enhanced Wealth Limited
The latest figures from the Council of Mortgage Lenders show remortgaging as 46% of total lending, but warned:"There are a lot of potential clients who represent a good borrowing risk but do not have enough equity to meet their needs through a remortgage. Others face early repayment charges, have credit problems or just do not want to add to the size or term of their loan. That is where the second charge loan comes in."
Sean Horton, director of broker Enhanced Wealth Limited, commented: "A second charge loan or secured personal loan can be a good option for clients with current redemption penalties. It is also useful if a clients credit history has deteriorated since taking out their main mortgage. In this scenario, remortgaging on an adverse credit basis may cause the interest rate charged to be higher overall than if a secured personal loan was used for just the additional funds.
However, secured personal loans are by their nature more risky so the interest rate charged will be higher than the main mortgage. Secured loans can be obtained for up to 125% of the value of the home and can be used for almost any purpose. The individual client's circumstances and repayment terms will determine whether a second charge loan or refinancing is more appropriate. We always recommend clients seek advice from an independent mortgage broker”.