Which is Best: Second Mortgage or Secured Loan?
Tags: Home Loan AdviceYou see endless ads about taking a second mortgage. Is this really the best option for you and your situation? The answer is “No!” In many cases, a second charge in the form of a secured loan might be a superior solution for your situation.
You can use the secured loan for anything you wish, from a remodeling loan to a caravan loan to upgrading your flat. It can be tailored to your individual situation and needs. A second mortgage may carry more restrictions on what the funds can be used for and how much money can be lent. With a secured loan, you’ll be able to get hold of the funds faster through a simple application process, with fewer fees and no legal fees.
Look at the terms of your current mortgage. Many mortgages carry an early redemption penalty in the case of a second mortgage being taken out. If your mortgage carries this fee, you’ll almost certainly be in a better situation by going with a second charge in the form of a secured loan rather than a second mortgage.
If you have acquired bad credit since taking out your mortgage, you may also find that a secured loan provides better terms. By remortgaging your entire mortgage amount, you would have your new credit rating applied and possibly gain a much higher interest rate than that of your current rate. However, by taking out a secured loan instead of a full remortgage, you’ll only pay a higher interest rate on a portion of your loan total.