Remortgage
Costs:
The costs of organizing a secured loan to pay off unsecured debts vary depending on:
- The lender selected
- Whether the loan is protected
- The fees charged
The lender selected
The greatest influence on the overall cost of a secured loan is the lender selected.
The price a lender charges is in turn influenced by the type of customers they are looking to attract.
Broadly speaking it is possible to identify three bands of secured loan interest rates based on the credit profile of a customer.
| Credit Profile | ||
|---|---|---|
| Very clean | Some arrears | Arrears and defaults |
| 4% - 6.5% | 6.5% - 9.5% | 9.5%+ |
Loan protection
The second major charge which influences the monthly cost of a loan is protection (this is accident, sickness or unemployment cover).
This cost is set in relation to the size of the loan. The higher the loan the greater the level of protection and the higher the overall cost.
Whilst each lender decides what they charge for their protection it is generally recognized that all lenders make a lot of profit from this loan add on.
At present the cost of a loan is often inflated by about 30% to finance this protection cost.
If you feel this protection cost is important to you it is usually better to buy a stand alone policy which is likely to cost a quarter of the amount charged by a loan provider.
Fees charged
It is possible with remortgages and secured loans to find fee free lenders but these are increasingly difficult to find.
Also these lenders tend to increase the cost of their interest rates which ultimately makes their costs about the same.
The fees outlined below can usually be paid separately or added on top of the loan provided.
| Fee type | Cost | Notes |
|---|---|---|
| Legal fees | £400-£800 | Can be added to the loan |
| Arrangement fees | £100 upwards | Dependent on the size of the loan |
| Redemption fees | variable | These fees are not charged by a new lender but are an exit charge from some existing unsecured lenders |
Use our FREE Credit Report to see if Remortgage is the right solution for you.
Remortgage: Main
Remortgage: Criteria
Remortgage: Considerations
Remortgage: Costs
Remortgage: Merits