Remortgages
What is a remortgage?
A remortgage is when you take out a new mortgage, sometimes from a new lender to repay your current mortgage; typically, this is done at the end of your existing mortgage’s ‘product’ period.
An example of this for a fixed rate mortgage would be when the fixed rate period ends and the rate of interest charged moves onto a lenders ‘standard variable rate’
What is a remortgage used for?
Reduce costs
You may have noticed that your current mortgage provider is not offering the most competitive rates on the market. After you have had your property for some years, you may be eligible for cheaper rates. A remortgage can help reduce your monthly outgoings.
Interest only to repayment mortgage
If you initially took out an interest only mortgage, you aren’t actually making any payments towards the property. You may want to remortgage your home to start paying towards the ownership, otherwise at the end of the agreement the lender will want payment in full of the outstanding balance. You should seek remortgage advice before hand.
Outstanding unsecure debts
You can incorporate your debts into your mortgage for example loans or credit cards. You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments. Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.
Home improvement
After living in your home for several years, it could be looking a little tired and dated. You may even wish to have an extension or a whole new kitchen and bathroom. A remortgage could release some equity from your home to invest back into your property. Speak to your remortgage advisor on the best way to achieve this.
What should you consider before taking a remortgage?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Early repayment
The early repayment charge is applied when you decide to pay off your mortgage earlier than the fixed term ends. This is usually a percentage of the outstanding value on the mortgage.
Legal fees
Legal fees are normally paid by lender when your remortgage your property however some lenders offer cash back to cover this cost
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayment on your mortgage.