A remortgage is for people that already have a home, but are looking to change their mortgage without moving. With a remortgage, the amount of money borrowed is secured against the property or the land.
Finding a better deal
One of the most popular reasons for remortgaging is to get yourself a deal that is better than your current product. If you are currently on a fixed rate mortgage, you may find that you are better off switching to a tracker/variable rate, taking advantage of the current Bank of England base rate. Likewise, you may be on a tracker mortgage but feel that you prefer the security of fixed monthly payments.
Home improvements are something all homeowners consider at some point – a remortgage is often the best way to secure the money you need to cover the cost of the work. People often choose a remortgage to add an extension to their homes, which is a cheaper alternative that moving, and can boost the value of a property.
A remortgage presents a great way to borrow extra money, and it is possible to use the money to consolidate other debts and lower your overall monthly payments. Mortgage interest rates are usually lower than other loans and credit card rates, allowing you to manage debt easier.
Purchasing a new property
Releasing equity in your home can provide you with the sum of money you require to purchase a second property, be it a holiday home, or a buy-to-let. Taking out a second mortgage for such an investment can be risky, whereas a remortgage will provide you with the assurance that you can still comfortably manage monthly repayments.
People with a bad a credit history, ccj’s, default arrears and missed mortgage payments, may assume that no lender will grant them a remortgage product. However, while it is indeed more difficult for those with bad credit, it is not impossible to achieve a remortgage. There are several lenders out there that will still offer loans to those with poor credit, although it is worth consulting a mortgage advisor for help.
There are often fees involved in remortgages which can amount to thousands of pounds. Lenders will often charge an arrangement fee; on top of that there are legal costs and an outgoing exit fee. However, it is possible to avoid paying such fees by finding one of the many lenders out there that do not charge. The best way to do this is to consult an independent mortgage advisor for advice.