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Remortgaging

Submitted by Mortgage Broker on Tue, 2006-08-01 13:47.

In the past it was common to stay with the same mortgage provider for the duration of the term but now an increasing number of home owners are taking up the option of remortgaging. Switching your mortgage from one lender to another can save you money by capitalising on more favourable interest rates or terms offered by companies trying to attract new customers.

There are other potential benefits of remortgaging:

Debt consolidation: In a situation of positive equity, ie the value of your home exceeds that of your mortgage – as is often the case after the property boom of the last decade – then you can take advantage of the situation by paying off other debts by remortgaging. You will still be paying off the same amount of debt but the interest rates of your remortgage are likely to be more favourable than those of personal loans, credit cards, etc.

 

Home improvements: Once again, releasing the capital of your positive equity by remortgaging can provide you with funds to significantly improve your home which will also increase its value. You can also make purchases like a new car or pay for a holiday or wedding. Once again, the interest rates of your remortgage will be preferable to those of other forms of credit.

What Steps To Take

Applying for a mortgage with a new lender on your existing property is the same in principle to the process when buying your home. Your income is assessed and a survey is carried out on your property. The lender will require a conveyancer to make a local authority search for proof your ownership of the property. However, unlike buying a property there are no contracts for solicitors to draw up so the cost is less.

As a means of attracting new customers some mortgage providers offer remortgaging packages including reduced legal fees, valuation and administration.

If you wish to remortgage, the first thing to do is ask your existing mortgage provider for a redemption statement, which will tell you if you have to repay any penalty fees for early settlement. Then decide what kind of mortgage you want and get some quotes. Once you have narrowed down your choice, calculate any legal fees you will incur. Work out what your monthly repayments will be and calculate how much you will save each month. Then take your time to weigh up all the pros and cons before making a decision.

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