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Can I remortgage if I have a secured loan?

REMORTGAGING | 14.01.2022

If you currently have a secured loan attached to your property, you may be concerned about your ability to remortgage. Whilst it is possible, there are several things to consider based upon your individual circumstances before you progress.

What is a secured loan? 

A secured loan enables you to borrow by using an asset as collateral. Also known as a homeowner loan when taken out against a property or mortgage. This type of loan may be most suitable to those with poor credit scores struggling to access finance. Should you default on payment with this type of loan, you would put your property at risk of repossession by the lender. 

Remortgaging, what does it mean

Remortgaging by comparison is usually a four- eight week process of moving over to a new lender with your existing property. This may be perhaps to get a better deal than your current lender can offer you on your mortgage. 

Does a secured loan affect remortgaging?

If you already have a secured loan taken out against your home you may still be able to remortgage. It may in fact be a good option if your mortgage term has ended and you have been moved onto a standard variable rate. In this instance remortgaging may be suitable as you’ll be free to switch without charge.

Clearing the loan 

You could opt to clear the loan by remortgaging and borrowing more. If you are looking to remove the risk of default and repossession that comes with the secured loan, this may be a solution for you. However it is important to note that your lender may want to see your financials. Your income and expenditure along with the value and equity of your property. These factors will influence how much you will be able to then borrow.  By clearing the loan when you remortgage you will then only need to make one payment to one lender each month. However you should ensure you are able to afford the cost of the monthly repayments, as they would likely be higher than they were prior to remortgaging. 

Keeping the loans separate

If you find yourself unable to borrow more to clear your secured loan, you may instead decide to keep the loan separate from your mortgage. In this case some lenders may be less inclined to remortgage your property and the attached secured loan may impact the interest rate of your new mortgage.  If you are looking for advice on how to remortgage with a secured loan chat to our team of expert advisors today for more information. Get in touch here.   
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