Remortgage and secured loans are both sorts of home loans that are available only to homeowners as they are both home loans that need to be secured against some form of collateral, and on this occasion this collateral is the equity in the property.
Whenever loans are secured it means that the interest rate for these secured loans or remortgage is usually lower than the unsecured loan interest rate. This is a because the lender feels that he is in a better situation regarding the borrower making all the loan payments.
The rates of interest for secured loans and remortgages are usually considerably less than that of unsecured loans where the loan provider is taking a bigger risk, because if the borrower defaults in his payments , the lender cannot do much about it except from taking out a default or CCJ against the borrower, and when borrowers own their homes, the loan provider can register an inhibition which is like a County Court Judgment secured against the property. An inhibition is recorded at the Land Registry, and the homeowner cannot sell his home without first paying off the inhibition no matter how big or small the inhibition is .
However this means that the lender can have a very long wait before receiving the money back, especially if the borrower remains at his property for a long time. When borrowers choose to stay at the same property for his whole life the loan may never be paid back.
It is as such the lack of security for unsecured loans that makes their interest rates expensive , and it makes no sense for homeowners to apply for this sort of loan when remortgages and secured loans are on the market at low interest rates. It is sensible to use your position as a homeowner to raise funds at the lowest rates available.
Therefore it is imperative for homeowners to avoid unsecured loans and to take out low interest remortgages or secured loans which be much less expensive..
categories: refinancing,real estate,home loans,remortgages,secured loans,mortgages,home improvements