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Debt consolidation, home improvement

Can I Remortgage if I Have a Homeowner Secured Loan?

Yes you can – and the process is reasonably straightforward.

Depending on your circumstances, you have two choices if you want to remortgage and you have a secured loan:

  • Remortgage and borrow additional funds to repay the secured loan
  • Remortgage and keep the secured loan

If you have equity in your home, you may decide to raise additional money as part of your remortgage to repay your secured loan. This may save you money if your new mortgage deal is lower than your secured loan interest rate. You would be left with one lender, one loan and one single ‘charge’ over your property.

However, you may not want to repay your secured loan. Your income may not be sufficient to increase the amount of your mortgage, or you simply want to keep the two loans separate.

In this case, you need to find a remortgage lender who is prepared to accept a ‘second charge’. Ask prospective lenders this question early, so you don’t waste your time making a remortgage application only to be declined later on.

Once your remortgage is in process, there will be some additional legal work required to deal with the secured loan. The solicitors involved in the remortgage will have to complete a ‘deed of postponement’.

The process works as follows:

  • The ‘deed of postponement’ temporarily removes the ‘second charge’ that the secured loan company has on your home
  • Your current mortgage is repaid and the solicitor removes the mortgage lender’s legal charge over your property
  • The remortgage is completed and the new mortgage lender’s first charge is registered on your home
  • The ‘second charge’ is then re-registered on your property

Whilst a mortgage company will often pay for the legal costs when you remortgage, you will generally have to foot the bill for this additional work. You are likely to pay around £200-£300, but check with the solicitors involved before the process begins.

If you are planning to retain your homeowner secured loan, the ‘deed of postponement’ process may also mean that the remortgage process takes longer than normal.

To use your home to raise money at a competitive APR, please fill this homeowner loan form.

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