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What is a remortgage

A remortgage involves refinancing a property that you already own; it involves transferring the debt from one lender to another. You do not have to stay with your current lender and it will be in your interests to review your mortgage periodically.

Why remortgage

To raise capital

To improve your current mortgage package

To consolidate your current borrowings

Raising Capital

You can release some of the capital tied up in your home by remortgaging. This equity can be used for most purposes. Typical uses are to fund the purchase of a holiday home or let property. Equally you can raise capital to buy a car or to fund home improvements. Most reasons will be acceptable. Some lenders will be unhappy if the capital raised is to be used for business purposes or to pay an income tax bill.

The advantage of raising capital this way is you will be paying a mortgage interest rate which is likely to be lower than any other form of borrowing. You will also be paying the debt over a long period, typically 25 years, this will have the effect of making the mortgage affordable.

The disadvantage is that the debt will be secured against your home. If you are unable to maintain your mortgage payments then your home could be repossessed. Paying the debt over a longer period will mean that you will be paying more interest back to the lender.

To improve your mortgage interest rate

Most lenders offer an inducement when you initially take out a mortgage. This may be a discount or a fixed rate offered for a period which is typically 2 to 5 years. At the end of this period your mortgage will revert to the lenders standard variable rate which will invariably be higher. This is a good time to review you mortgage and see if there are any better offers.

Early repayment charges will often apply during any fix or discount period. If early repayment charges apply now this may make remortgaging uneconomic. Please bring any early repayment charges to the attention of your mortgage broker.

To consolidate your current borrowings

It is quite easy to build up borrowings using credit cards and loans. Credit card interest can be very high, sometimes between 20 and 30%  pa. If you have savings then these debts should be cleared first. Please see debt consolidation.

One option is to consolidate your borrowings under your mortgage. This has the advantage of a lower interest rate and a longer pay back period resulting in lower monthly outgoings

The disadvantage of debt consolidation is that the debt will be secured against your home. If you are unable to maintain your mortgage payments then your home could be repossessed. Paying the debt over a longer period will mean that you will be paying more interest back to the lender.

Costs of remortgaging

Most lenders will charge a valuation survey fee and an arrangement fee. In addition there are likely to be legal fees to pay for the legal transfer of the mortgage. Some of these fees may be paid by the lender. Some may be added to the loan. Please ask your broker for a breakdown of costs and whether any incentives are available.

How long will it take

Typically, three weeks from application to mortgage offer, another three weeks from offer to completion. The time taken depends on the lender and the speed of the legal team processing your application.

Please feel free to contact us if you have any query. Remember, we do not charge you any fees under any circumstances!