Secured Loan or Re-mortgage, The Balance of Power

(Author: Wayne Ouellette Sr | Article Views: 8 | Word Count: 507 | Published: May 20th 2008)

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Application fees on the best buy fixed-rate mortgage deals have nearly doubled in the past year, according to current analysis.

In the last year alone, the fees on the five most competitive two-year fixed deals have moved from an average of 999 up to 1,478. And for three-year deals the average level of fees has moved from just 578 to 1,132 now.

Last October the base rate was 5.75% and the average interest rate of the top five two-year fixed rate mortgages was 5.68%, but now it is 5.57%. Three-year fixed deals have seen a similar tiny reduction in interest rates with the average rate of the top four deals moving from 5.84% to 5.65% over the same period of time.

All the recent publicity recently about the credit crunch and the bank's fluidity problems has stoked the near panic in people and they are tempted to grab the best percentage rate deal they can find. The problem is that very often they overlook the fees which when added to the 2 or 3 year deal make the mortgage a lot more expensive than it first seems.

There could be a nasty shock when it comes to the fee which is charged as they have surely increased beyond proportion during the past year. What people should focus on is the true cost of their loan by taking into account fees as well.

Lenders in the current financial climate are taking a much tougher line but there will still be lots of very good deals available, unfortunately largely for people with lots of equity in their home and a strong credit rating.

With Clients wishing to raise capitol intermediaries should now be changing their strategies for raising this money in light of the credit crunch. Also changes in the Consumer Credit Act have come into force and this means that a secured loan could probably be a better option than re-mortgaging.

These new changes changes to the act mean that all secured loans for residential purposes of any size come under the Consumer Credit Act and therefore every loan has to have a cooling off period, so the client is not pressured and an important factor is that early repayment charges are a maximum of two months interest depending when in the current month they notify the lender. When you add in that there are no upfront fees in the shape of application fees, booking fees and valuation and conveyancing costs then it's pretty easy to work out that on a direct comparison secured loans work out to be better value for clients.

The whole point here is that if you are tied in to your current mortgage provider, in some cases even if you're not, and wish to raise some money or simply restructure some finances then consider a secured loan as an alternative to a re-mortgage. The protection of the Consumer Credit Act and also the saving of the upfront fees and the much smaller early repayment charges mean that a secured loan could be much easier to arrange and quite a lot cheaper.

About the Author

Russell Marsh - Get the best Secured Loans in the UK market. Cheapest Loans by Far is the UK's Premier cheap Secured Loan provider. Need a mortgage? then go to Debt Consolidation Mortgages for the best mortgage deal available in the UK.

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Staff: Edit This Article

1: Secured Loan or Re-mortgage, The Balance of Power

2: How To Find The Best Lender When Refinancing Your Mortgage

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