James Copper asked:


When looking to remortgage your aim is to switch to a deal that is more beneficial to you and saves you money/increases flexibility etc, whether this be sticking with your present lender or changing to another.

What Are The Benefits Of Remortgaging?

Remortgaging is a chance to switch from an inadequate mortgage and take full advantage of current products available such as fixed rate, tracker or discount mortgages which can offer you more competitive rates. Choosing the right deal for you is just as important when remortgaging as it was the very first time. Consideration should be given on your prediction of future interest rates, your own risk assessment, your income and the balance of the loan outstanding. You will also need to weigh up your monetary needs and present circumstance.

Adverse Credit Remortgages also enable you to cut loose from a dissatisfactory lender as there is nothing to say you should stay with the same one.

Doing either of these things when remortgaging may considerably reduce your monthly out goings. This is just one benefit of deciding to remortgage.

Say for example you have a loan of 100,000 and are paying a rate of 7.5% interest; you then switch to another lender which has a rate of just 7% interest. This would mean you would be saving 31 each month, thats nearly 400 per annum.

Sometimes the money tided up in the house could be put to better use else where. For an amount larger than what is needed to repay your original mortgage, remortgaging can release some of this equity to put towards investing in a new business venture or maybe even another property.

How Long Will The Process Take?

The process of remortgaging tends to be faster than that of a normal mortgage (but slower than adverse credit loans) as in this case youre not buying a property. The whole process without considering individual circumstances should take on average six weeks.

The Cost Of A Remortgage

As with your original mortgage, a survey to confirm the value of your property will need to be done as the first one will no longer be valid. Add onto this solicitors fees and administrative costs, however these will be lower than mortgaging for the first time and depending on your lender, they may be able to recommend certain people in association with them that could lower your costs.

There maybe early repayment charges on your existing mortgage. This is when there is a penalty if you redeem the mortgage within a fixed period of time after commencing. For example this could be additional pay of three to six months or a percentage of the loan amount.

When looking at the cost of a remortgage you also have to look at the possible longer term benefits of the process and the money you could save.

Quick Action Plan

If still indecisive on whether remortgaging could work for you, run through the following points:

First of all communicate with your existing lender and ask for a redemption statement. This indicates what, if any penalties you will be charged in the event of remortgaging, it also states the amount still left to pay on your current mortgage.

When looking at a remortgage deal be sure to look at all the small print and ask for the lender to show you clearly what your potential repayments would be. It is always useful to ask for something in writing to use as a reference.

Add up all costs payable with any new lender i.e. the arrangement and administrative fees. Legal fees should also be added on, these will vary depending on where you go and the value of your property.

Armed with these facts and figures you should then weigh up whether remortgaging will benefit you, whether the long term savings will outweigh the immediate costs of remortgaging.



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Luke Ashworth asked:


Everyone is familiar with a mortgage, an industry term for a loan given to allow an individual to purchase a home. If a mortgage is a loan taken on the value of your home and the promise to pay a monthly rate in the future, a remortgage is attaining a mortgage on your home or property after you have already attained one.

Types of Remortgages

Remortgages come in a variety of arrangements and structures. The most common is a Standard Variable Rate (SVR). A Standard Variable Rate is a remortgage where the interest floats upon the market rate. Even under this variable rate, however, the first few months are typically fixed below market to entice you to take on the loan.

The other major type of remortgage is a Fixed Rate Mortgage. Fixed Rate Mortgages differ from SVR’s insofar as the interest rate is determined and remains flat from the beginning. This type of loan is more dependable, insofar as you know exactly what your payments will be from start to finish, but it is more risky in that you may end up paying too much if rates fall (or too little if they rise). As a result of this increased risk, banks typically charge a slightly higher rate for fixed rate remortgages.

There are also a wide variety of intermediary remortgaging options. Lending options like capped rate, tracker, and droplock loans are all variations on remortgages which blend some aspects of variable rate and fixed rate mortgages.

Reasons to Remortgage

Remortgages are in many ways identical to a mortgage . It involves you presenting your financial situation, your need, and the collateral (your property) to a lender. Borrowers must convey a strong case for why their loan is a good risk for the lender. But unlike mortgages , where almost always the sole reason for the loan is to enable you to purchase a home, the reasons for taking a remortgage are quite varied.

Saving Money

The primary reason why individuals remortgage is to take advantage of lowering interest rates. Many mortgage holders can attain lower interest rates either because the prevailing interest rate has falling across the lending industry, their personal credit and financial situation has improved (meaning that lenders can now have more confidence in them), or because the equity they have placed in their home has reduced the total exposure of the loan and made the loan less risky for investors.

Raising Money

The second major reason why people remortgage their property is to raise significant amounts of cash quickly. The most popular method of doing this is through cash out refinancing. This essentially means attaining a new loan for the full amount of your home. You can then use the money that you attain through this loan to pay off the remaining portion of your existing home loan and pocketing the difference.

Improving your Home

Another reason why people engage in remortgages is to free up some cash for another venture. This typically involves taking out a smaller loan against the value of your home. This can be done either as a mortgage (if no other mortgage exists or you are going to replace your existing mortgage with a larger remortgage) or a secured loan if you want a second loan in addition to your existing mortgage.

Consolidate your Debts

The final major reason for remortgaging is to consolidate debts. Often borrowers have accumulated debts from a variety of different sources, home mortgage, credit cards, car loans, etc. These loans can be difficult to keep up with and many often carry high or varying interest rates. As a result many individuals find significant savings as well as increased convenience in compiling all of these loans into a single remortgage loan.



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