The Benefits of a Remortgage

Save money by getting a lower interest rate
Most borrowers pay interest on their home loans at the lender's Standard Variable Rate (SVR), which is often a lender's most expensive option. Lenders have better deals with lower interest rates which they use to attract new customers. By switching lenders (remortgaging) you can take advantage of these discounted rates. However there are usually costs involved in remortgaging such as early repayment charges. These should be taken into account when applying for a remortgage but often the benefits out-weigh the costs.

Raising money for home improvements etc.
Homeowners who want to raise money for home improvements, buying a car or other purposes can find that a remortgage to raise the money is better for them than taking out a personal loan or using credit cards. This is because interest rates on mortgages are amongst the lowest of all the different types of loans.

But although many people choose to do this, it can be a complex decision with a number of important considerations - such as the effects of borrowing against what is normally a long-term mortgage and securing that loan against your property.

Debt consolidation
Homeowners may wish to raise money to consolidate other debts. By taking advantage of remortgaging your property you could transfer several debts into one probably more manageable mortgage payment. This means you can consider replacing payments for credit card bills, personal loans and other loans with one lower interest rate remortgage and spread lower payment.

But this approach, although common, needs careful consideration paying particular attention to the effects of extending the period of the loan and securing the loan against your property. It could be that negotiating with existing creditors would be better for your particular circumstances.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

What you should consider before you remortgage

Is there a "tie in"?
You may find the most attractive remortgage, but before you go for it be sure to find out whether you'll be tied in for longer than you want to be. If you want to leave the mortgage before the end of the term for whatever reason and you are tied in you might have to pay an early repayment charge. This is a charge you have to pay for leaving your current lender before the agreed time. Always read the small print on any legally binding forms given to by a lender, and if you're not 100% sure it's probably safer to let an expert guide you through.

What is the lenders standard variable rate?
One of the most important factors to consider when entering a mortgage deal is the Standard Variable Rate (SVR), as this is the "default" or standard interest rate charged by all lenders. Once any introductory offers have ended you will be transferred to the lenders SVR. If you are tied in to the deal then you will find yourself paying the SVR or paying early repayment charges charges to switch lenders.

Are there additional costs / fees?
Make sure to find out whether the lender offers free valuation, set up fees and that they pay for the legal fees. Many lenders will offer to pay the legal fees providing that you use their appointed solicitor.

For more information on remortgaging, and to discuss your options with a fully qualified mortgage broker, we recommend you get in touch. Offering a free recommendation and advice service, at no cost and with no obligation, you can find a money-saving deal today - simply complete an online form by clicking here, and we'll be in touch within the hour!!