Mortgage Insurance Calculators About How it Works
   Back | 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
   Back | Insurance
   Back | Calculators
   Back | Your Mortgage Position
Your Mortgage Position
Bad Credit
Bridging
Buy to Let
Development Finance
Self Employed
Mortgage for professionals
Lifetime Mortgages
Expat mortgages
Interest Only
Mortgage Affordability
Mortgage Application
Income Types
Residential Mortgages
Commercial Mortgages
Property Types
Remortgages
First Time Buyers
Mortgage Declined
Offset Mortgage
Other
   Back|Bad Credit
   Back|Bridging
   Back|Buy to Let
   Back|Self Employed
   Back|Expat Mortgage
   Back|Interest Only
   Back|Income Types
   Back|Property Types
   Back|Remortgages
   Back|Other 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.

Discover What Our Customers

Have to Say!
Our Customers
Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
twitter  linkedin  

Pros & Cons: Secured Loans vs 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.

Why Revolution Brokers?

Whole of market brokers Whole of market brokers

Mortgage that suits you Mortgage that suits you

On time customer support On time customer support

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].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

twitter  linkedin  

Further Reading

Explore Explore Our Presence Our Presence

Explore Explore Our Presence Our Presence

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

Revolution Mortgage Brokers:100% 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.

Refer, Relax

andget £50get £50
We are proud
members of the:
NACFB
Refer, Relax

FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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