A remortgage allows you to switch your existing mortgage to a new one with a different lender or change the terms of your current mortgage.
Why Remortgage?
There are several reasons why you might consider remortgaging:
- Lower interest rates: You could secure a lower interest rate with a new lender, reducing your monthly mortgage payments.
- Change your mortgage term: You could switch to a shorter or longer mortgage term, depending on your financial goals.
- Borrow more money: You could borrow more money against your property, for example, to make home improvements.
- Consolidate debt: You could consolidate other debts, such as credit card balances, into your mortgage, potentially reducing your overall interest payments.
The Remortgaging Process
The remortgaging process generally involves these steps:
- Research and compare: Start by researching different mortgage lenders and compare their interest rates, fees, and terms.
- Apply for a new mortgage: Once you've chosen a lender, you'll need to apply for a new mortgage.
- Get your mortgage approved: The lender will assess your financial situation and decide whether to approve your application.
- Complete the legal process: You'll need to sign legal documents and complete the necessary paperwork.
- Your new mortgage takes effect: Once everything is complete, your new mortgage will take effect, and you'll start making payments to your new lender.
Remortgaging Considerations
Before you remortgage, it's important to consider the following:
- Fees: Remortgaging can involve fees, such as arrangement fees, valuation fees, and legal fees.
- Early repayment charges: You may have to pay early repayment charges if you remortgage before the end of your current mortgage term.
- Impact on your credit rating: Applying for a new mortgage can affect your credit rating.
Example
Imagine you have a mortgage with a 5% interest rate and you find a new lender offering a 3% interest rate. By remortgaging, you could reduce your monthly mortgage payments and potentially save money in the long run.
