What does re-mortgaging mean?
Remortgaging means getting a new mortgage with a different lender but not selling your house, just changing the mortgage, what else do you need to know?
By Nick Partington
A mortgage can last many years, and it is important to think about your financial options thoroughly. The decisions you make when remortgaging are just as important as when you decided on your original mortgage deal.
Even if you have had a mortgage for years, you may still be unsure about the potential benefits of changing lenders and exactly what happens when you remortgage.
Remortgaging involves switching your existing mortgage to a new mortgage deal with a new lender. You’re not moving house and the new mortgage is still secured against the same property.
The more equity you have and the lower your loan to value (LTV), the more competitive the rates you will qualify for.
Here are some of reasons for remortgaging
- To reduce the interest rate on your mortgage
- To fix your monthly payments and protect against possible future rate rises
- Raising money to carry out home improvements
- Raising a cash lump sum by releasing equity from your home
- Consolidate your debts
Remortgaging onto a lower interest rate could save you a considerable amount of money.
Another popular reason to remortgage is the option to consolidate all of your debts into one payment – however, be aware that as this means securing more debt against your home it may cost more in the long run, and it’s something you should seek advice on.
Releasing equity from your property can be a good way to raise a cash lump sum, provided you can afford the new repayments.
How does remortgaging work?
Remortgaging can be a wise financial move, whether it is to get a better interest rate on your mortgage or to consolidate your debts into one payment.
However, this decision cannot be taken lightly, and you should investigate thoroughly to ensure you are getting the best remortgage deal. There is competition within the marketplace for your business, so shopping around could save you money.
Once you have an idea of what kind of deals are out there, you can contact your current lender and see what they will offer you so you can work out if it’s worthwhile switching to a new lender.
See our guide – How do I Remortgage my Home – for more information
“Re-mortgaging can provide major benefits and we are specialists in providing the best advice on options for your re-mortgage.
Which one do I need?
That really depends on the property you are buying and you should seek advice from your mortgage broker or estate agent.
You need to appreciate that a mortgage valuation is for the lender to assess whether the property you’re buying is worth the asking price, before they approve your mortgage.
Whereas a homebuyer report is for your benefit, it could save you a substantial amount of money should there be problems with the property. It may also provide you with evidence to negotiate a reduction on the property’s asking price. It could even make you think twice about buying the property at all.
You should also be aware that some lenders offer mortgages with free valuations and you can ask for this to be upgraded to a homebuyer report, you would only pay the difference between the two and could get a homebuyers report for around £250 which may be good value.
A homebuyer report costs from around £500, depending on the size and value of the property. Even if you can’t get a discount, this can still represent excellent value if it identifies serious issues with the property.
