Lesley Lyon asked:


Remortgage is the process of paying off one mortgage with the proceeds from a fresh mortgage using the same property as collateral primarily to secure a more favorable interest rate from another lender. The reasons for remortgaging may be many, like reducing the size of repayments, to raise capital or to consolidate other debts.

Merely switching from one product to another with the same lender is not a remortgage but it is the removal of one legal charge over a property and its substitution with another from a new lender.

People having a costly and unsuitable existing mortgage with a poor credit history can go in for remortgage thus getting a better interest rate and lower repayment than the existing one. This helps to save lot money over the term as well as on a monthly basis. Regular monitoring of the credit report and any improvements will give an indication of the most suitable time to apply for remortgage. Interest rates on bad credit remortgages are higher than average and vary from one lender to another. Therefore it is advisable to compare a number of mortgage rates to find a suitable interest rate and payment. This can be achieved through online to save a lot of time, tension and energy.

Sources that offer remortgage are banks, building societies, individual lenders and mortgage brokers. A wide variety of remortgage products are available like fixed rates, capped rates, cash backs, flexible, discounts etc.

Remortgaging usually involves certain costs like application fee, solicitor’s fee, surveyor fees, redemption fee of the older mortgage and broker fee. Whatever be the type of mortgage the buyer should be aware of the interest rate and the period in case of a fixed or capped rate. Variable rates vary over time and therefore in case of a discount, standard variable rate has to be paid. Annual percentage rates reflect the cost of the loan and helps in comparing different deals. Remortgages can be done as many times as possible as long as it saves money. In a remortgage, there are restrictions on the amount that can be had depending on the purpose for which it is intended.

The basic difference between a remortgage and a refinance is that a remortgage is accepting a loan from a new lender where as a refinance can be provided by the existing lender or the new mortgage provider. Mortgaging can also serve to release equity in the borrowers home, which is the difference between the market value of a home and the amount the borrower still owes.

The procedure for obtaining a mortgage is fairly simple and the paper work involves proof of income, debts and expenditure. Although remortgage can be successfully accomplished in four to six weeks’ time, the duration may vary depending upon other lender and specific circumstances surrounding the property.



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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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