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Remortgage: An overview

Remortgage is the payment of one mortgage by taking out a new one from a different lender keeping the same property as security. In other words, it is the process of switching lenders. The purpose of remortgage usually is to obtain an interest rate that is more affordable or favorable. The process of remortgage is carried out all over the world but under different titles. 'Remortgage' is a term that is more common in the US and the UK. Often the term is misused- when buyers are switching products with the same lender, they wrongfully call it remortgage. Also, switching the legal charge over a property is not remortgaging. Remortgage is when a homeowner decides to pay the existing mortgage on his house by taking out another mortgage from another lender

Types of remortgage

Fixed rate remortgage- In fixed rate remortgage, the interest rate stays at a fixed level for a certain period of time. But with the changes in economy, the rate will change.

Standard variable rate remortgage- A standard variable rate remortgage is one where the interest rate changes with the lender’s standard variable rate which is a bit higher than the base rate at the Bank of England.

Flexible remortgage- As the name suggests, a flexible remortgage is flexible. It depends on your income- you can choose to overpay or underpay depending on the cash flow.

100% remortgage- 100% remortgage is when you borrow the full value of your property from a new lender.

Joint remortgage- Joint remortgages are just like joint mortgages where everybody (both the mender and the loan taker) involved in the process is responsible for meeting the remortgage payments.

Offset remortgage- It links the savings in your savings account to the mortgage and reduces the interest rates on it (mortgage).

Online remortgage- The whole process carried out online which makes it fast and easy.

Current account remortgage (CAM)- Combines your mortgage and your current account balance that reduces your debt.

Repayment remortgage- The repayments go towards paying off the capital as well as the interests on the remortgage.

Tracker remortgage- A variable of standard variable rate remortgage.

Self employed- This is when you fly solo without the help of any broker.

Why remortgage?

To save money

Lenders' rates and offers are changing all the time. Every day lenders come up with attractive rates and offers that could actually reduce the stress that you incur every month over mortgage paying. If you've been with your current lender for more than five years, then it is almost certain that you’re missing out on the many offers and rates that might be saving you thousands. So, take the magnifying glass in your hand and go Sherlock over the new rates and offers on the internet. You'll find plenty of offers and rates that'll enable you to choose a plan for mortgage repayment that suits you best. You can reduce overall monthly installment amounts by taking on loans for longer periods or even reduce the interest rates by trying new offers.

To raise money

If you're planning on releasing some capital from your property or to consolidate short term debts, remortgaging is the course of action for you.

To be free

If you’re tired with the pace that you’re going with your current mortgage payment, you can fast forward by choosing to remortgage. Simply, find another lender who’s offering you a good rate that you can pay off fast and switch your current lender with him.

Remortgage is costly business. One’s personal circumstances and financial conditions need to be taken into account before making any decision. One should seek expert advice before jumping into it.

You can find help online regarding remortgage. Plenty of websites are out there that offer guidance considering your present conditions in terms of finance. They also offer the service of free remortgage quotes that will give you an overall idea of the cost that you will be bringing upon yourself before you go and find a new lender. These websites usually redirect you to actual brokers who will give you clear-cut advice regarding your current mortgage and what to do with it. But before that you’re going to have to fill up a form and submit it online. They will ask for personal information and the price of your house –these are necessary. The best thing about these websites is that you get to post questions inquiring about anything that concerns you and they’ll answer your questions right away.

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