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2008-01-26 08:34:26
Should I Borrow Against My Mortgage? The Pros and Cons of Borrowing Against Your Mortgage
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 Borrowing against your mortgage can seem quite intimidating at first glance. However, when you weigh the pros and cons of borrowing a substantial amount of money against your mortgage versus taking out an unsecured loan, you will quickly see that borrowing against your mortgage is the smart and economical thing to do.
How exactly does it work? Well, let's say that you are a home or flat owner who is currently living in the United Kingdom. You have owned your home for a while, and have a decent amount of equity built up in your home due to rising property values in the UK and monthly mortgage payments.
Let's say that you have a pressing need to borrow a substantial sum of money. Let's say that your kitchen and bathrooms are falling apart and you need to renovate them. Not exactly a cheap job, and you will probably need to borrow somehow in the neighborhood of 25-30k pounds to get the job done.
By borrowing against your mortgage, or taking out a "secured loan", you can borrow substantial sums of money without paying through the nose when it comes to interest rates. This is the case because you are pledging the equity in your home as collateral against the loan, making you a good credit risk. Because you are a good credit risk, the banks can charge you lower interest rates because there is less risk on their end. Also, you will be much more flexible in terms of how long you have to pay the loan back. You can choose a term of anywhere between 3-25 years.
Unsecured loans charge far more for interest. For comparison purposes, a typical secured loan interest rate is around 8.5% APR, while an unsecured rate is usually 15-16%. Plus, you are able to borrow much larger sums of money with a secured loan.
So in terms of pros, we have: lower interest rates, flexible repayment schedules and the ability to borrow much larger sums of money. What are the downsides?
The main downside is the fact that if you don't keep up with your payments (just like with your mortgage), there is the chance that you could lose your home. But if you have a mortgage (when you obviously do if you are reading this article), you are already aware of the risks of not keeping up with your payments, so this is nothing new to you.
If you need a loan for debt consolidation, home renovations or any other purpose, simply click on the link underneath this article and you will be taken to an application page. It takes five minutes of your time to fill out the application, and within a day or two an agent from a leading secured loan firm in the UK will ring you up and help you get started. There is absolutely no obligation to take out a loan should you be approved.
Apply for a Lending Place secured loan today!
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Applicants with bad credit history, Mortgage Arrears, Missed payments or CCJs are welcome.
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