Secured loan/bigger mortgage?

LeShark

Hi

Just wondered what/if there's a difference.

I have equity in my home...do I ask for a bigger mortgage or a secrured loan? Are they the same thing?

Thanks

jonesMUFCforever

I would go for the mortgage.
You can apply to preent lender as they will know about you and your repayment history.

Do not approach somebody like Picture Loans off the telly. They have horrendous early closure penalties as well as having higher rates.

JoeK_3

LeShark wrote: »

Hi

Just wondered what/if there's a difference.

I have equity in my home...do I ask for a bigger mortgage or a secrured loan? Are they the same thing?

Thanks

What do you want the extra money for?

JoeK

LeShark

To clear the debt.

JoeK_3

The cheapest way to raise money is on a mortgage but your current lender will only allow you to raise money for home improvements at the mortgage rate.

After that a secured loan is the cheapest.

JoeK

LeShark

So I'm better to wait until I'm ready to sell, then pay off the debt and extend the mortgage for a bigger house at the same time?

JoeK_3

LeShark wrote: »

So I'm better to wait until I'm ready to sell, then pay off the debt and extend the mortgage for a bigger house at the same time?

That depends on when you want to sell.

Is it soon or in the next five years?

JoeK

LeShark

It'll be next march

jonesMUFCforever

JoeK wrote: »

The cheapest way to raise money is on a mortgage but your current lender will only allow you to raise money for home improvements at the mortgage rate.

After that a secured loan is the cheapest.

JoeK

1. Do we know who the mortgage lender is?
2. I can only speak about C&G but there is no restriction about what the money is for as long as you can afford the repayments.

LeShark

Lender is HSBC. Thanks for your thoughts so far guys!

keyser123

I wouldn't consider taking a secured loan out if you are going to sell next year. If you borrow more than £25k then it wouldn't be regulated by the CCA and so you'd be subject to the lenders redemption penalties (approx 6 months interest). Any potential saving you may make by consolidating unsecured credit would be eaten up by the redemption penalty.

If the loan is for £25k or under a secured loan may not be too bad an option as the red penalty would be one month's interest (the lender may or may not also charge a discharge fee) but it all depends how much you'd save per month over the next 10 months or so to see whether it would be worth it.

From what you've said, I wouldn't think securing unsecured credit for the sake of a few months would be a wise option - if something were to happen out of the blue you could find yourself in a tricky situation.

Tighten your belt little and wait until you sell then clear the exisiting credit with any equity you are left with.