The Features Of Remortgages, Mortgages And Secured Loans
The Features Of Remortgages, Mortgages And Secured Loans
Although the majority of people have heard the words, remortgages, mortgages, unsecured loans, homeowner loans, and so on, they are unaware of the similarities and different features of these finance products.To start with a short explanation of the meaning of unsecured loans. The name itself clearly states what these loans are, and that is that they need no security of any kind.As such theoretically everyone and anyone can make an application for such a loan. This is true in theory, but not in fact in practice.Being unsecured, the lender feels that he is taking somewhat of a risk, and tenants in particular, will find it difficult to obtain such a loan these days.Tenants and those with a poor credit rating really are mourning the demise of lenders such as Welcome Finance who advanced these personal loans to almost anyone Providing that an applicant was in employment, they could at least obtain a small loan from Welcome.Even homeowners find it difficult in the present economic climate to obtain an unsecured loan , and there is no point in applying for such a product unless your credit rating is first class and you have been working for the same company for a number of years.Secured loans are obviously, as their very name states, the opposite of the unsecured type, in that they require some form of security, and usually the security required is property.In the case of homeowner loans, the property needed is the borrower's property, or more accurately the equity that is available.When talking about business secured loans, the required asset is the commercial property out of which the company operates.Secured loans for homeowners can be used to purchase almost anything, and they are also commonly used for debt consolidation which pays off all other credit card debts, etc., and leaves a single, more manageable repayment in place of all the other debts.Some people also confuse mortgages and remortgages, and think that they are exactly the same form of home loan, when in reality this is not the case.A mortgage is the loan needed to buy a property whether to get on the property market for the first time, or to move from one owned home to another.Most home buyers do require a mortgage, as few have sufficient financial means to pay from their own resources. A remortgage is only available to homeowners, as remortgages replace an existing mortgage, very often at the end of the homeowner's current mortgage deal.When homeowners take out a mortgage, they are normally tied in to their current deal for a set period of time, after which many seek a remortgage to obtain a lower rate of interest, and as such remortgages are not a product for someone who is not already a homeowner.Mortgage rates vary considerably from one provider to another and therefore it is perfectly feasible to get a better interest rate.When the remortgage is for the same value as the previous, it is known as a like for like, but sometimes remortgages are used to raise additional money that, like for secured loans, have a myriad of purposes, including doubling as debt consolidation loans.