Understanding remortgages

Understanding Remortgages: The Basics

You may have heard about remortgages but don’t know what they are or how they can help you. Here, we look at what remortgaging is and why you might want to do it.

What Is A Remortgage?

Remortgaging means taking another mortgage out on a property that you own already.

You may remortgage with:

  • Your current mortgage lender
  • A different provider

 

How Does Remortgaging Work?

Mortgages are most people’s largest financial commitment. Finding the best mortgage deal can save you a lot of money every year. Usually, remortgaging is quite straightforward. You can get quotes to help you find the best deal for you.

What Happens If I Stay With My Current Lender?

If you stay with your current lender you can transfer to another mortgage deal that they offer. As they already know everything about you and the property there are no fees and no legal work. Your lender just moves you onto your new deal. You then start to pay the new amount from the start date.

What Happens If I Change Lender?

Switching to another lender is a bit more complicated. You need to give them up-to-date financial and personal information. They will look at your credit history too and arrange a valuation of your property. You may need to use a conveyancer to do the paperwork. After signing the paperwork, the new lender will pay the old mortgage off. You will then begin making payments to your new lender.

 

Why Remortgage A Property?

There are several reasons to consider remortgaging your property. They include:

  • Your existing mortgage deal is coming to an end. Many mortgages have rates that last just 2-5 years. After that you go onto a standard variable rate. That will usually be a lot higher.
  • The property’s value has increased. If your property is now worth a lot more than when you took the mortgage out, you may be able to get a lower interest rate.
  • Your current lender won’t let you overpay. Overpaying your mortgage can pay it off more quickly and reduce your interest. However, some lenders do not let you pay extra amounts off your mortgage.
  • You want more flexibility. Some mortgages will let you have a payment holiday.
  • You need to raise some money. Remortgaging can be a useful way to release some funds to pay for home renovations or a new car.

 

Is Remortgaging Right For Me?

There are many reasons to consider remortgaging. But it is not the right choice for everyone. You may not want to remortgage if:

  • You do not owe much on your mortgage, for example, under £50,000.
  • You have to pay a high early repayment fee.
  • Your financial circumstances are different from when you took your current mortgage out.
  • Your property’s value has gone down.
  • You do not have much equity in your property.
  • Your mortgage rate is already good.

 

If you think that remortgaging is right for you, Conveyancing Supermarket is here to help you find the best rates. Get your quotes today.

 

 

 

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