The Similarities Between Secured Loans, Mortgages And Remortgages
There are three loans that are very similar to each other to each other and these are secured loans
, remortgages and mortgages, and what the connection between them is because they need to be secured on the equity available on a property.
People not up on equity must learn that equity is the difference between the value of a property and the balance of the mortgage secured on this asset..
Therefore if a homeowner has a property valued at 295000 and a mortgage balance of 145,000 the equity would be 150,000.
Although remortgages,
secured loans and mortgages are all secured homeowner loans they have several things relating to them that are different.
Let us first of all look at mortgages and to give an explanation of what they are, is that mortgages are loans needed to purchase property.
The only other means of buying property is if the person buying has enough funds of his own to fund the purchase from his own bank account. This naturally eliminates the need for mortgages, and would mean that the property is mortgage free.
A remortgage is the replacing of the mortgage already secured on a property with a new mortgage taken out with a completely new mortgage lender which can be for the same amount as the current mortgage. This is what is referred to as a like for like remortgage.
A remortgage can be used for a huge range of reasons such as to pay for home improvements when paying these improvements with ready cash can mean that the homeowner can get a bargain for a new conservatory, etc. Such things as a wedding, a holiday, a car, etc. can also be paid for with remortgages .
If a homeowner takes out a remortgage to raise money for
debt consolidation he will save hundreds monthly or even more if there is a lot of debt , but even a like for like remortgage is capable of granting savings
Secured loans, are second charges on the property, and like remortgages can be used for almost any reason.
by: Kelly Davies
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