Re-mortgage Your Home or Get a Secured Loan?

By Russell Marsh

It's been a sad fact that application fees on fixed rate mortgage deals have more or less doubled in the last 12 months according to current research.

Fees for the best two year fixed deals around have increased in the last year from 995 on average to 1,400 over the past year. The cost of three year deals has also gone up from an average of 580 to nearly 1,150.

Last October the Bank of England base rate was 5.75% and the average rate amongst the best 3 year fixed rate mortgages was 5.84%. This has gone down to 5.65% which is expensive comparatively speaking. Two year deals were at 5.68% and they have only gone down to 5.57% in the same time period.

The recent, very high profile, problems in the banking and mortgage industry have meant that lots of people are jumping the gun a little and opting for the lowest interest rate deal they can possibly find. They should also consider the fees associated with these lower rate loans as when added together over a two or three year deal these are working out to be much more expensive.

There could be a nasty shock when it comes to the fee which is charged as they have surely increased beyond proportion during the past year. What people should focus on is the true cost of their loan by taking into account fees as well.

There are still many good deals out there for people with substantial deposits or equity in their home and strong credit ratings. Unfortunately many people will not be eligible for them as lenders are increasingly taking a tougher line.

With Clients wishing to raise capitol intermediaries should now be changing their strategies for raising this money in light of the credit crunch. Also changes in the Consumer Credit Act have come into force and this means that a secured loan could probably be a better option than re-mortgaging.

All secured loans for any residential purposes, under the new legislation, now come under the Consumer Credit Act. This means the client has to have a compulsory cooling off period. This has obvious advantages in that the client doesn't feel under such pressure. If you also consider that with a secured loan there is no valuation fee, no conveyancing and no booking or application fees it's pretty obvious that secured loans are a much better option in some cases than re-mortgaging. Even early repayment charges have a ceiling of two months interest (depending on when in the month the borrower informs the lender).

The whole point here is that if you are tied in to your current mortgage provider, in some cases even if you're not, and wish to raise some money or simply restructure some finances then consider a secured loan as an alternative to a re-mortgage. The protection of the Consumer Credit Act and also the saving of the upfront fees and the much smaller early repayment charges mean that a secured loan could be much easier to arrange and quite a lot cheaper.

Get the best Secured Loans in the UK market. We will scour the entire UK portfolio. Want a mortgage? then go to Debt Consolidation Mortgages for the best mortgage deal available in the UK.

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