Homeowner loans: when keeping your mortgage might make sense

The loan is secured on your home behind your mortgage, so you keep making two payments: your mortgage, plus the loan. How much you can borrow usually depends on the equity in your home, your income and your credit history.

It may suit you to leave your mortgage alone when:

• your current rate is lower than the rates available now
• you would pay an early repayment charge to leave your current deal
• your current lender won't lend more, or not as much as you need
• your circumstances have changed since you took out your mortgage, and a new mortgage application may be assessed differently

For some homeowners a remortgage serves them better than a separate loan, and for others the reverse. The broker will tell you which suits your circumstances.

• The rate. Homeowner loan rates are often higher than first-mortgage rates.
• Fees. There may be a lender fee and a broker fee, and these are sometimes added to the loan.
• The term. A longer term lowers the monthly payment but usually raises the total you repay.
• The security. The loan is secured on your home, as your mortgage is.

Ask the broker to explain fees, any early repayment charges, the repayment term and the total amount repayable for each suitable option.

A homeowner loan can combine your other borrowing into one monthly payment, while your mortgage payment carries on as before. Consolidating is an option, not a requirement - an adviser will check whether it suits you.