With so many ways to borrow money, it can be tough to decide which the best option for you is.

Credit cards, unsecured loans and mortgages are all possible choices, and each has their own advantages and disadvantages. There are certain circumstances in which unsecured loans may actually be better than remortgages.

If you are trying to decide between a personal loan and a remortgage, here are some useful tips:

Short term borrowing

Even the lowest loan rates may not be low as the rate you have been offered for a remortgage. However, for short term borrowing you could actually pay a lot less with unsecured loans.

This is because the term of the lending is likely to be much shorter. You will pay more interest over the course of a twenty year mortgage than you will over a three year loan – even if the interest rate is significantly lower.

You want to keep your mortgage rate

When you remortgage, your whole home loan is repaid and you take out a brand new mortgage with a new lender. A problem arises here if you are benefiting from a good rate on your main mortgage.

You may not wish to remortgage the whole amount if you are benefiting from a low interest rate on your main mortgage. So, it may be worth taking out the additional borrowing you need via a loan.  Compare personal loans to find the lowest interest rate and benefit from the best of both worlds; the lowest loan rates on each form of borrowing.

You have ‘early repayment charges’

If you are on a discounted or fixed mortgage rate, you may find that you have ‘early repayment charges’ (ERCs) if you pay off your mortgage early. You may therefore find that it is not financially worthwhile to repay your mortgage as you will have to pay a substantial penalty.

In this case, unsecured loans may be a much better option. You can borrow the amount you need without having to repay your current mortgage.