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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