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Remortgages Guide
Outlined below is a useful remortgages guide. Remortgaging has
become increasingly popular due to the relatively simple and
flexible process.
A remortgage is exactly as the name suggests, taking out a new
mortgage and repaying your existing one in order to realise
equity and sometimes to reduce monthly payments.
Basically, a remortgage is when you transfer your existing
mortgage agreement to another lender. A remortgage will mean that
the new lending company will pay the old provider the balance of
the amount outstanding and you will continue making your payments
to the new lending company.
Many people do not realise that they can simply pay off their
current mortgage and take out a new one. By remortgaging your
home, you could save significant amounts on your monthly
payments.
Review your current mortgage. If you feel you are paying
excessive rates of interest, compared to other lenders then a
remortgage may save on your monthly payments. Alternatively, you
may be looking for a way to finance an extension or purchase a
new car, you could seek to increase your mortgage and take the
extra sum as cash.
A remortgage can be used for the purpose of gaining lower
interest rates on your mortgage or raising finance through
releasing equity. Releasing equity is a good way of raising
additional finance. If your home has positive equity - its market
value is greater than the outstanding mortgage - you can increase
the size of your mortgage.
A remortgage is a great way of saving money, as it is likely
to lower your mortgage interest rates. A mortgage is also one of
the cheapest forms of loans around, so if you're looking to raise
finance, it makes sense to remortgage your home.
There are various reasons why someone would remortgage. Quite
often it is just a cost saving exercise to reduce the monthly
payment, although increasingly it is seen as a way of
consolidating debts and reducing the overall household outgoings
each month.
One of the most common reasons for remortgaging is to reduce
costs. By switching to a lower interest rate you can either
benefit from lower monthly repayments, or keep the monthly
repayments the same, thus repaying the loan quicker and reducing
the overall term of the mortgage.
Another reason to remortgage is in order to raise additional
cash. Due to the rapid rise in property values over the past few
years, many people now have mortgages which are well below their
home's current value. The difference between the property value
and the mortgage debt is known as equity. The majority of
mortgage lenders will allow you to increase the size of the
mortgage in order to tap into some of this equity. The cash
raised can be used for a variety of purposes, such as home
improvements, holidays, a new car, or the consolidation of
existing debts.
The advantage of borrowing money against your property is that
the rate will almost certainly be better than if you took out a
personal loan, and because you can spread the cost over the
remaining term of the mortgage, the repayments are lower.
Unlike moving house, arranging a remortgage can be
surprisingly simple. There are no chains of buyers to worry
about, so the whole process can often be completed in a few
weeks. The remortgaging process from start to finish normally
lasts between 4-6 weeks.
In terms of costs there is no stamp duty to be paid, as you
are not purchasing a property. Many lenders will pay some or all
of your valuation and legal fees. In some cases there may be an
arrangement fee or booking fee from the new lender.
Whether to remortgage depends on interest rates. You always
have to be sure that you can meet the repayments whatever the
economic climate. There may also be redemption penalties on your
existing mortgage and you will need to take these into account
when assessing how much money you could save by remortgaging.
You may freely reprint this article provided the author's
biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
website.
 MORE RESOURCES updated Thu. February / 09 / 2012
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