Secured loan V Remortgage

Credit Action, a national charity, in 2011 declared the average family had outstanding unsecured credit totalling £16,307 most of which was outstanding credit cards balances. With the cost of Christmas many credit card balances have increased.

According to Norton Broker Services, this creates the opportunity to consolidate a client’s credit card debts into one manageable payment.

Some homeowners can be helped by having a Re-mortgage but there are 3 instances where a Secured Loan may be more appropriate:

-  Prime borrower on a standard variable rate mortgage with a very low interest rate

- Borrower with missed mortgage payments in the last 12 months

- Borrower has no mortgage arrears but historical adverse

Secured Loan Example: Credit Card balances of £20,000 to be consolidated:

- Credit Card simple annual rate (Which web calculator): 19.90%
Minimum Monthly Payment on £20,000: £310
Approximate time to pay balance off in full: 22Years

- Credit Card simple annual rate (Which web calculator): 29.90%
Minimum Monthly Payment on £20,000: £450
Approximate time to pay balance off in full: 15Years

- Credit Card simple annual rate (Which web calculator): 34.40%
Minimum Monthly Payment on £20,000: £500
Approximate time to pay balance off in full: 20Years


- Secured Loan Term: 10 years
Prime Borrower Low-Cost SVR Mortgage Monthly Cost: £283
Borrower 2 Months Mortgage Arrears Monthly Cost: £343
Borrower No Mortgage Arrears 3 Defaults & 1CCJ Monthly Cost: £351

- Secured Loan Term: 15 years
Prime Borrower Low-Cost SVR Mortgage Monthly Cost: £228
Borrower 2 Months Mortgage Arrears Monthly Cost: £292
Borrower No Mortgage Arrears 3 Defaults & 1CCJ Monthly Cost: £301

A major benefit of a Secured Loan is the early repayment charge of only one month’s interest a feature that allows Intermediaries to offer a Re-mortgage to clients at a later date. Result: increased income for the Intermediary and a satisfied client who has saved money.