Working Hours: Mon - Fri: 9:00AM - 6:00PM
Call Us: 0330 304 3040
Home Mortgage Calculators About Blog
   Back | How it Works
How it Works
Securing an excellent mortgage offer with Revolution Finance Brokers couldn't be easier
1Get in Touch
Complete a quick form to give us an overview of your mortgage or financing requirements, and we'll provide recommendations about the best opportunities for you.
2Submit Your Application
Once you've chosen your preferred mortgage deal, we'll steer you through the paperwork with comprehensive application management from start to finish.
3Mortgage Completion
Revolution Finance Brokers will finalise the details and enable you to move forward without delay!
   Back | About
About
Blog
Contact Us
FAQs
Documents
Areas
Credit Report
   Back | Insurance
Insurance
Business Protection Insurance
Life Insurance
Building Insurance
Home Insurance
Mortgage Repayment Protection
Family Income Benefit
Critical Illness Cover
Income Protection
Life Assurance
   Back | Calculators
Calculators
Stamp Duty
Commercial Stamp Duty
How Much Can I Borrow?
Buy To Let
Bridging Loan
Residential & Commercial Bridging
Mortgage Repayment
Development Finance
Commercial Mortgage
   Back | Choose your mortgage type
Choose your mortgage type
Bad Credit Mortgages
Bridging Finance
Commercial Mortgages
Buy to let
Self Employed Mortgages
Mortgages for Professionals
Lifetime Mortgages
Expat Mortgages
Interest Only Mortgages
Mortgage Affordability
Mortgage Application
Income Types
Residential Mortgages
Development Finance
Property Types
Remortgages
First Time Buyers
Mortgage Rejection
Offset Mortgages
Second Charge Mortgages

Pros & Cons: Secured Loans vs Remortgaging

Remortgaging is just one option to raise finance against a property – you might also consider a secured loan. Here we compare both options like for like to help you make informed decisions.

Are Secured Loans Better Than Remortgaging?

A secured loan is where you borrow funds, which are secured against an asset, usually property. This means that, if you default on your payments, the lender can take control of the asset to gain back their money.

Often, a secured loan takes the form of a second charge mortgage, with your current mortgage being the first charge - or the priority lending secured against your property.

Although we hear a lot about second charge mortgages, in actuality you could have as many as five or more, depending on the lender.

Secured loans can be with the same provider as your first mortgage, or might be with an alternative lender. Usually, the same lender offers competitive rates and considers a secured loan an additional advance on your original borrowing.

However, rates on secured loans can be higher than on initial mortgages given the increased risk level, whereby the first mortgage has priority if the house were to be repossessed and sold.

Therefore, a secured loan or second charge mortgage could be left unpaid even if the property were repossessed, if all of the sale proceeds were taken by the first mortgage provider to repay the outstanding balance.

About Your Mortgage
Single or joint mortgage?
What’s your yearly income?

Error: Yearly income income must be between £1 and £10,000,000.

Do you receive a regular bonus?

Error: Regular bonus must be between £1 and £10,000,000.

Based On Your Yearly Income, You May Be Able To Borrow

image
£0

Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

image
£0

Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

image
£0

Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

Why Would I Choose a Secured Loan Instead of a Mortgage?

Sometimes, a secured loan is a good option, even if the rates are higher than those available through a remortgages.

Here are some of the most common scenarios when a secured loan makes the most sense:

  • Your current mortgage rate is excellent. If you have a mortgage with a highly competitive rate, you might be well advised never to sacrifice that mortgage if no product on the current market can beat it. Usually, these are old mortgages sold many years ago - tracker mortgages with a small margin on the UK interest rates can be as low as 0.99% interest. In this scenario, if you wanted to release equity, it would be preferable to take out a secured loan as a second charge, without remortgaging your current mortgage at a much higher interest rate.
  • Fast processing. When you need to release capital fast, a secured loan is often the quickest option available. If the loan is at a low LTV and you don't need a property valuation, you can even achieve a secured loan in one day. Typically, the process takes around a week, with an extra few days if you need a valuation report. However, secured loans are nearly always faster than remortgages, so are a good option when you need funds quickly.
  • Applicants with variable income. As more people start their own businesses or become self-employed, a remortgage can be difficult to negotiate if you can't demonstrate your income, or don’t have two to three years of trading history. Secured loans tend to be more flexible, and you can use bank statements to demonstrate your income if you don't have filed accounts. For applicants who have recently changed jobs, or don't have filed accounts, this is a better option than waiting two to three years until you are eligible to apply for a remortgage.
  • Interest-Only Remortgages. Many lenders will offer a range of remortgages, but it can be harder to find an interest-only option. Secured lending is available as an interest-only loan, provided you meet other criteria.
  • Higher LTV Remortgages. If you are looking to finance up to 95% of your property, you will struggle to find a remortgage product that offers this high an LTV. Most lenders will cap a remortgage up to 90% as an absolute maximum. However, secured loans can cope with a 95% LTV provided you meet other lending policies.
  • Bad Credit History. With severe bad credit history - including CCJs or bankruptcies - it can be challenging to find a remortgage. Specialist lenders can be more flexible, but with secured loans, there is a higher degree of negotiation, and you usually have more options than you would through a remortgage.

Secured Loans vs Remortgages in Summary

Remortgaging is usually the cheapest way of accessing further lending, and is often the first choice for homeowners who want to release equity.

Secured loans are an alternative option, and although more expensive, can be a viable choice when needing to release funds fast, retain your current mortgage rate, or to find borrowing when you cannot meet the usual remortgage criteria.

If you are considering a secured loan, or need help comparing options for remortgaging and a second charge mortgage, give the business finance broker team a call on 0330 304 3040 or send us a message to [email protected].

Further Reading

PROCESS

Explore Our Presence

Securing an excellent mortgage offer with Revolution Finance
Brokers couldn't be easier:

cityam
dailyexpress
dailymail
standard
FT Advisor
LBC
The Guardian
Independent
Metro
Mortgage Introducer
Sky News
The Sunday Times
Yahoo
This is Money
Mirror
LBC
The Sunday Times
PROCESS

Revolution Mortgage Brokers:
100% Independent & Whole-of-Market

As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.

REFERRALS

Refer, Relax, and get £50

Ask the Expert
Mortgage Brokers

Revolution Brokers
What can we help you with today?
Do you have a particular timescale in mind?
Next
Which situation from the below list best matches your requirements? *
Could you tell us the market value of the property?*
Please let us know a rough idea of your yearly income (before tax) for all applicants? *
Back
Next
Primary applicant name *
Contact email address *
Best contact number *
Back
Next