What is a Re-Mortgage?
Many people don’t fully understand what is meant by a remortgage - what is it really?
Re-mortgaging a home used to be associated with financial problems, missed mortgage payments or even bankruptcy, but this is no longer the case. To re-mortgage a home simply means switching an existing mortgage, usually to a new mortgage lender, to capture a better deal or lower interest rates if the borrower is coming to the end of a fixed or discounted rate. In fact, this practice has become very popular in the UK.
As people become more financially aware and information from the financial markets and mortgage lenders become more easily accessible, it makes sense as a borrower to shop around and stay up to date on what’s on offer from lenders. Re-mortgaging can save a lot of money, if done properly. For example, if your current mortgage is a standard variable rate mortgage, it is highly likely that by switching mortgage types, you could enjoy lower interest rates, if market rates have declined since you took out your initial mortgage.
One of the most common reasons for a re-mortgage might be to consolidate all debts into one payment, secured on a property.
Another reason for a re-mortgage may be because you might want to make home improvements, such as adding a conservatory or a garage and instead of taking out another loan; you could add the cost to the current mortgage, making just one monthly affordable repayment.
Another reason to re-mortgage an existing property is accessing a home’s positive equity. With home prices rising all over the UK, homeowners are experiencing high levels of positive equity. Equity is the property value, less the outstanding mortgage. Thus, a positive equity means an increase in the value of the property. This positive equity can be released by re-mortgaging and used in turn for home improvements, a new car, a holiday or anything else one might usually get a personal loan for, even consolidating existing debts. In these cases, it makes sense to re-mortgage, because the interest rates are very low compared with many personal loans and credit card rates.
A great source of information about re-mortgaging is the Heron mortgages website. The Heron Mortgages website also has great information about Problem With Mortgage Arrears and No Proof of Income Mortgages.
Re-mortgaging doesn’t always mean switching lenders. It is pos sible that the existing lender may offer a more attractive mortgage rate, in order not to lose a client. This is still re-mortgaging, and it may become more common in the future, as lenders realise that consumers are becoming more informed and are changing their ways in order to realise savings in the mortgage deals and are looking for fixed rates in order to control their budget.
By Jack Mack
Able Guidance From Mortgage and Remortgage Advice
In case you are paying more on your monthly payments you should start considering taking mortgage and remortgage advice. More and more people are shifting their preference towards remortgage. Remortgage should rest on some serious [...]
Adverse Credit Remortgage UK – Switch Mortgage for Benefits
The best considered way to reduced monthly payments is to go for remortgage. but your problem is that you have adverse credit and lenders may refuge you a new mortgage. In the UK, you can however rely on adverse credit [...]
A Guide to the Best Remortgage Deals
Finding the best remortgage deals isn’t always easy, especially with the large variety of lenders available today. It can sometimes take a lot of research and time to locate the best deals for your home, though the end result is often [...]
Mail this post