Press Release Summary: Personal Loan or Remortgage?? You have to choose between the two.
Press Release Body: \"We can see a ray of hope at the end of the channel for lending", says the Bank of England. But people searching for a personal loan are surprised by this saying since Money facts, a monetary market analyst, declared that some time back, the prominent loan providers started raising their interest rate by some percentage.
Samantha Owens at Money facts says. "The lenders have become more conscious of the menace of bad debts realizing the credit crunch in the industry." She further added, "This points out that the lenders are looking forward to charging some premium from their customers and only interested in making their own profit rather than competing with credit cards carrying low interest rates as they were doing some years ago."
Barclays, Tesco, HSBC, Nat West and HBOS are some examples of loan providers that have increased their interest rates to some percent. Nationwide said past week, "We are planning to increase the price by 1 percent on all of our personal loan products." This concludes that if a person is willing to borrow amount from Nationwide, ranged between £1,000 and £3,000, he would be liable to pay 17.4 per cent that is much higher than the interest rate currently available on credit cards.
This upward trend seems to be harsher with the Bank of England whose rates have just fallen last year-end from 5.75% to 5%. Another example could be of Alliance & Leicester, whose current rates on "best buy" loans on an amount of £5,000 are over 7%.
So what options are left to a borrower who needs instant cash?
According to some experts in this field says, "Consulting your mortgage provider for a further advance on same property is a much better option to go with, than going for a personal loan, despite all your doubts of negative equity." Peter O'Donovan at Best Invest says, "At the worst, you will be required to pay the usual variable rate that is below 7%."
But considering the realism of credit crunch, one can't expect getting his application approved by the lender.
Mr. O'Donovan further added that for reconsideration of your advance, they will assess your home's value and the size of mortgage you already owe. Now one can get only 90% of the value of his property, not the whole 100%.
An alternative available is to take a remortgage with some other lender but it will cost you much and is more risky also at this point of time.
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2022
