Why Remortgages And Secured Loans Should Improve.

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by: championfinance
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Word Count: 456
Date: Wed, 19 May 2010 Time: 11:43 PM
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Before the recession, remortgages and secured loans were very popular home loan products. Remortgages and secured loans have a great deal in common, and the most important mutual aspect, is the fact that they are both realated to property, or even more specifically, to the amount of equity that there is in a property.

Equity is the difference between the value of a property and the outstanding mortgage balance. This means, that if a property is worth £300,000 and the mortgage on it stands at £220,000, the equity in this particular case would be £80,000.

Before the recession, house prices in general rose year after year, with a home doubling in value every seven years approximately, and as such, if a homeowner had lived in his property for several years, he would have a considerable amount of equity that he could use on which to secure a secured loan or a remortgage.

A secured loan is a second charge on a property that is regisered after the first mortgage at the Land Registry and that is why they are sometimes referred to as second mortgages as well as homeowner loans.

These secured loans can be used for a large number of purposes, from paying for a wedding or a holiday, school or university fees, to fund home improvements and very often they are used as debt consolidation loans.

What debt consolidation is, is the rolling together of all outstanding debts in credit cards, personal loans, etc. into a single much cheaper payment every month.

A remortgage is the moving of a current mortgage to a different lender, and like secured loans, were very popular prior to the credit crunch when homeowners had equity to obtain a better interest rate by changing to a new mortgage lender.

Low mortgage rates depend on the equity, and the more equity the lower the rate charged.

The recession put paid to the popularity of these two products, as many, due to the fall in house prices simply had no equity.

House prices are now rising again, and if it continues in this way, it should not be long before secured loans and remortgage applications and approvals all increase again.

Further signs of improvements are being witnessd with the lowering of interest rates for homeowner loans and remortgages, and the introduction by one secured loans lender of self declarations of income for self employed homeowners.

These self employed loans are only available to homeowners who can provide the last three months bank statements, and substantial equity is also needed.

However it is still good news for those self employed who have been struggling to obtain extra money, and it again is an indication that remortgages and secured loans are once again witnessing an upturn.

About the Author

Liz is an underwiter with Champion Finance who have been providing secured loans since 1985. Liz is also an underwriter for remortgages