Sometimes A Remortgage Is A Better Choice Than Secured Loans Otherwise Homeowner Loans.

When a homeowner needs to raise funds for almost any purpose he can take out either a remortgage or a secured loan.

It is only those who actually own their own property who can apply for either a remortgage or a secured loan because both require to be secured upon the equity on the property.

Normally secured loans are secured on owner occupied property but some lenders advance these home loans on buy to let properties which have a sitting tenant.

Homeowner loans and remortgages have much in common, but the main difference between them is that a remortgage is a first charge and recorded at the Land Registry as such while a homeowner or secured loan is a second charge recorded on the Land Registry behind the mortgage already secured on the property.

Before the credit crunch homeowner secured loans were common and their rates commenced then at less than 6%.9%.

Since the start of 2007 secured loans have fallen to less than 20% of their level at that time and it is difficult to fully understand the reason for this because although interest rates have certainly risen, these home loans are still available from about 9% making them even now a cheap way for homeowners to borrow.

Homeowner loans are, as already stated, secured on the equity of a property and this means the difference between the real estate worth of the property and the mortgage balance remaining.

Before the recession, loan to values went up to 125% making it possible for a homeowner to borrow up to 25% more than the house was worth, but this has all changed and the maximum LTV for employed applicants is 80% and 70% for the self employed.

The loan to values granted for remortgages is slacker than for secured loans and some remortgage lenders advance remortgages at 90% LTV and if this is the equity needed remortgages would be preferable to secured loans.

Another time when a remortgage would be the home loan most suitable is if someone is seeking a really low rate of interest as interest rates for remortgages, as indeed for mortgages, start at only 1.84% but this low rate is only available to those who have at least a 40% deposit.

Sometimes however a secured loan is the better choice, and the main time is when a homowner is tied in with his current mortgage provider and would be required to pay an early settlements penalty if repaying sooner than agreed.

The minimum penalty is 2% of the outstanding balance but can even be as much as 5%. on a low mortgage of and pound100,000 would be £2,000 or £5,000.

Both remortgages and secured homeowner loans are suitable home loans but a homeowner's own circumstances dictate which is more suitable for him or her.