A remortgage is where you take out a new mortgage on a property you already own. This may be to replace an existing mortgage, or to borrow money against your property. Around a third of all home loans made in the UK are actually remortgages.
Why you might take out a remortgage:
If your current deal is about to end
Many of the best mortgages deals only last a short time – when the mortgage comes to an end you will automatically be moved to the lenders standard rates which are likely to be higher than the original rate which you were paying
Check whether there is an exit or admin fee for early mortgage payment if you decide to switch mortgage (“remortgage”)
Your home has increased in value
If the value of the property has risen since you took out your mortgage you may be eligible for better rates
You have received some money and wish to pay off a part of your mortgage. Your current deal may now allow you to do this and so this would be a good time to re-negotiate a mortgage.
You want to borrow more
If your current lender won’t allow you to borrow more, then another lender might. However, remember to take all the fees into account to check that it really is cheaper to remortgage rather than utilise other forms of borrowing.
You want a more flexible mortgage
You may wish to take a ‘payment holiday’ for such reasons as changing jobs, going back into education, travelling or you may wish to combined savings and mortgage accounts. Check out fees as flexible features usually come with a cost.
Reasons not to change
Your financial position may have altered and a new lender may not be prepared to offer you a loan as you don’t fit their criteria.
Value of your house has dropped
Often called negative equity, even if you have been making regular mortgage repayments you might be in a situation where your debt is higher than the value of the property. Often all you can do is sit tight and wait for prices to rise, and make overpayments whenever you can afford to.
You have very little equity
If you need to borrow more than 90% of the value of your property you may well find it difficult to better your rate elsewhere.
You’ve had credit problems since taking out your last mortgage
Mortgage lenders will want details or your incomings and outgoings and if they feel you may not be able to make the repaymemts no deal will be offered to you.
You’re already on a great rate
Just keep your eye on other deals to ensure you keep the best rate.