When you remortgage, you are switching your mortgage to another deal with a different lender.
Most people simply switch mortgages because it will work out cheaper for them but remortgages can be used for various reasons . For example, the introductory discounted interest rate may have finished with your current lender; therefore you could potentially get a new lower rate with another lender. Another example is when you may need to re-mortgage to consolidate debts or you may need money for home improvement.
It is worth noting that a remortgage is not the best option in all cases. Even if the lender you are considering switching to is offering a lower rate, you must take into consideration the facts that:
The new lender may charge you for valuation and solicitors fees, even if you have already paid these for your mortgage with your current lender. However, some lenders offer free valuation and free legal fees in addition to lower rates in order to attract borrowers with good track record of mortgage payments.
If you switch mortgage remember to look at the overall repayment period. You may be able to pay less monthly, but check the final repayment date of the mortgage as well.
- You may have to pay an early repayment charge to your existing lender if you re-mortgage.
Also you may be able to switch to a new deal with your current lender thus avoiding any unnecessary costs. Many lenders will allow you to switch your mortgage deal reasonably frequently. However, the new new deal that your current lender offers you may not be necessarily be the best deal you can have. Hence, the need for expert advice to make sure that you get the best deal.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service these services may be more suitable for you.
Finally, remember remortgaging may not always be the best option for you, if you need money for debt consolidation or home improvement as you may already be on a very low rate and a second charge or a personal loan, or another option may be a more suitable solution for you.