What is a Remortgage ?
A Remortgage in simple terms is a replacement Mortgage in place of your current Mortgage on your home. This can be achieved either by switching to a completely new lender, taking advantage of their rates to replace your existing loan. Or you can switch your current mortgage over to a new deal with the same lender. Regardless of whether the arrangement takes place through a different lender or same lender, both arrangements are referred to as a Remortgage.
Why do people Remortgage ?
- Save money
To entice and tempt prospective borrowers to take up their Mortgage offers, lenders usually advertise low fixed rate deals for a number of years, discounted rates for a set period or tracker rate Mortgages also offering favourable terms for a set period, say 2 to 3 years.
When the initial low rate offer period ends, usually after 2 years, the rate will then revert back to the lenders Standard Variable Rate (SVR). For example, the rate might be fixed at 2% for 2 years, and then revert to 3.9% (SVR) when the 2 year fixed period ends.
The borrower enjoys lower repayments for the first 2 initial years with a fixed rate with the current lender. As the end of the 2 year fixed period approaches, the borrower can start to shop around and secure another fixed rate deal with a different lender for maybe another 2 years or more. This is one of the main reasons why people choose to Remortgage, and avoids the borrower ever having to revert back to the higher Standard Variable Rate of lenders. This can ultimately save you Thousands of pounds over several years. As long as the borrower switches at the end of a fixed rate period, the current lender does not usually charge any early repayment fees to allow a borrower to leave them, and there are no such terms that insist that a borrower must stay with the same lender for the full term of a mortgage. However it is always a good idea to confirm with your lender if they charge any exit fees.
Remortgaging can be used as a way of clearing and settling debts accumulated through times of difficulty and hardship. Remortgaging usually charges much lower rates than credit cards and personal loans, therefore a Remortgage can be used to clear the debts outstanding on cards and loan accounts helping to lower your monthly repayments and save you money. You must be aware however, the consequences of defaulting on your mortgage through being unable to meet the repayments, are much more serious than defaulting on your personal loan or credit card, You could lose your home.
- Equity release and raise money
The Equity in your home refers to the difference between the amount outstanding on your mortgage and the current value of your home. For example, your house maybe worth £250.000 on the market and the amount outstanding on your current mortgage is £150.000. The difference between the outstanding mortgage amount and the property value is £100,000, therefore the equity in your property is £100,000. The equity in your house can also be increased by general house price rises, if you bought your house in 2008 your house price could have risen by £25,000 in 2013 5 years later. Remortgaging allows you to release some of this equity to use the cash as you wish.
- Home improvement
In relation to Equity release, a Remortgage could release funds built up in the Equity of your house to make home improvements and decorations, such as a loft conversion, kitchen extension, new bathroom or general re-decoration and refurbishment. This will add value to your home over the long term and improve your general living standards and home comfort.
Benefits of Remortgaging
- Raise money for Home improvements
- Remortgaging can lower your interest rates saving you money
- Remortgaging can place you with a mortgage deal that is much more suitable for your needs
- A fantastic way to release Equity built up in your home.
- Less Remortgaging options will be available to borrowers with an impaired credit history
- Remortgage special offers are usually subject to early repayment charges tying in a borrower until the end of special offer periods, which could be upto 3 or 5 years.
- Remortgages involve using your home as security. You risk losing your home if you do not keep up with repayments.
- The overall cost of your mortgage can increase if you decide to increase the term when Remortgaging.
- Any non-housing costs would not be covered if you ever had to claim benefits to assist paying your mortgage, for example, a car purchase or family holiday. These items would be deducted from your outstanding mortgage amount when calculating how much interest to pay of your mortgage.
What kind of rate could I get if I remortgage?
The following factors effect the kind of Remortgage you could receive.
- How much of the property you actually own, considering how much is still owed on your mortgage
- How much you earn
- How much you are seeking to borrow
- Whether or not your property has increased in value since you last took out a mortgage, and if so, by how much?
How long does it take to Remortgage ?
The time it takes to Remortgage can vary according to many factors and personal circumstances, But on average usually takes a month.
How I can Help
Apart from the fact that a Remortgage is usually a quicker process to complete, applying for and processing a Remortgage is no different from a fresh standard Mortgage application and just as complex. I can provide you with concise and comprehensive advice and assistance regarding all aspects of Remortgaging your home from initial advice to application stage and all the way to completion. Having a mortgage professional on hand to assist you every step of the process can save you time, effort and money, easing the stress of your Remortgage process.
Please contact me today for an informal and friendly chat to discuss your needs. All initial advice is completely free and confidential. You can contact me using the “contact us” form at the top right of this Page and i’ll get back to you as soon as possible, or alternatively you can contact me via my details below, or CLICK HERE
Thank you for visiting.
Balraj Singh (Bal)
Tel: 0330 010 1433 (Mobile Friendly)
Mob: 07985 417 490