Which Is Best a Secured Loan or Mortgage?

What You Need To Know Before Applying For A MortgageThe stricter lending policies that have been adopted by many banks mean that it isn’t as easy to secure credit as it once was. There are still many products available, however, particularly if you are already a homeowner. Mortgages and secured loans are two such products and here we take a look at each, their differences and how to use them most appropriately.

Which Is Best a Secured Loan or Mortgage?

Considering a Secured Loan? 

Secured loans have a number of benefits for those who looking to borrow capital. With a secured loan, you are able to borrow larger sums of money than you would be able with the likes of a personal loan – one which is unsecured. Typically, a bank or building society will allow customers to borrow up to £100,000 using a secured loan, whereas with a personal loan the maximum figure is more likely to be around £25,000.

You are also able to take out secured loans over a longer period of time. It is not uncommon for secured loans to be paid back over a duration of 15 to 20 years – the term of a personal loan is generally much shorter, 5 – 10 years for instance.

Secured loans such as the ones offered by Ocean Finance are named so as they use your current property as security and rates will be set depending on the repayment length and the size of the sum borrowed. Often secured loans are used to purchase cars, have extensive work done on a property or to help buy a second property. 

Increasing Your Existing Mortgage

Another option when it comes to big borrowing is to increase the amount of borrowing on your existing mortgage. To do so you’ll need to have built up some equity and the interest rate you pay on this further advance may be a little higher than on the existing deal.

Alternatively, you could switch lenders and increase the amount on the existing mortgage as you do so – in this case, however, there may be additional legal or administrative costs to take into account.

Increases on existing mortgages tend to be used for similar reasons to secured loans, extensions to properties or the purchase of expensive items. And it is to be highlighted that both involve using your property as security on the loan.

Secured loans and extensions on existing mortgages are common ways to raise large amounts of capital and if that’s what you are looking to do comparing the deals on each back to back is a good place to start.

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