What is a Remortgage?
A remortgage is the process of changing your current mortgage deal to a new mortgage deal usually from a different mortgage lender. A remortgage may also be available from your current mortgage lender but switching to a new mortgage lender with a more competitive mortgage interest rate is more common. Remortgages are often used to release equity tied up within your property in order to typically raise additional funds for home improvements, repay unsecured debts, a new car or even a family holiday. Most reasons for a remortgage are acceptable to mortgage lenders. A remortgage is also used even if additional money is not required (i.e. a remortgage for the same mortgage balance that you already owe) and is normally done if your current fixed term mortgage has come to an end and you require the security of another fixed term mortgage or because your current mortgage lender is offering a particularly poor mortgage interest rate and you can obtain a more competitive mortgage from a new mortgage lender.
On occasions it is policy for certain mortgage lenders not to offer a remortgage to current mortgage clients so in this case if you wish to remortgage for whatever reason you would need to swap mortgage lenders and take a remortgage from a new mortgage lender. This may seem unfair but quite often other mortgage lenders are keen to attract new mortgage lending business and will use incentives to attract your remortgage. This can be in the form of a free mortgage valuation, free solicitors fees (covering the basic remortgage function); cash back when your remortgage completes or even a discounted mortgage for say the first 2 years of the new remortgage.
If you remortgage your property this can often be the most competitive way to raise money at the cheapest interest rate. A new mortgage lender will take first charge on your property so this gives the mortgage lender an acceptably high amount of security for the money they have lent for the remortgage. The higher the percentage of the remaining equity (difference between the mortgage balance and the valuation of the property) the lower the new interest rate on your new remortgage will be. Maximum remortgage amounts are usually in the region of 85% of the property valuation (Loan to Valuation – LTV) but the better remortgage rates start at 75% and below.
Allowing for occasional dips, most UK properties have dramatically increased in value over the years providing homeowners with a growing amount of equity that can be remortgaged if required.
Although the adverse credit remortgage market has spectacularly tightened since 2007 some mortgage lenders are now coming back to the market with mortgage products for clients who have a bad credit history. Should this be your case please call or email as we can help offer adverse credit remortgages dependent upon personal circumstances. Adverse credit remortgages due to the perceived risk from the mortgage lender often have a higher mortgage interest rate and are available at lower LTV’s. With our wide product range covering regulated and non-regulated mortgages and bridging loans we are ideally placed to review your finance needs and source, recommend and implement any type of mortgage, remortgage or bridging loan.
Debt Consolidation
Is exactly what it says on the tin! This enables you to consolidate your debts into one affordable monthly repayment. In the right circumstances this can be a good thing to do. By consolidating your debts you could possibly repay your debt over a longer period of time making your monthly payments more manageable. However you may as a result of this pay more interest overall due to the length of time the debt is secured over.
Porting
Porting is an option available to some but not all mortgages. It allows you to move home and retain your current mortgage by exchanging the security property and can therefore prevent and early repayment charges becoming available. As long as you keep your borrowing at the same or an increased level you will avoid having to pay the early repayment charges.
