How Remortgaging Works
Why Should I Look To Remortgage?
You may have already heard the term remortgaging, whether it’s from a family member, a friend, or from a TV advert. But if you are coming to the end of your first ever mortgage term then the chances are you haven’t gone through the remortgage process before.
Remortgaging is simply the process of switching to a new mortgage deal either through the same lender or by shopping around for another deal. We tend to look at remortgaging when the rate on a current mortgage deal is coming to an end. That could be in the form of either an introductory tracker, fixed, or a discounted rate ending.
You should always check that you are not subject to any early repayment charges when leaving your existing lender, although this is less likely to be charged when a deal has reached its end.
What Happens If I Don’t Remortgage?
If you do not remortgage when a product ends then you may be switched across to a new rate with your current lender that could be either higher or lower than the one you were enjoying, as you are often entered onto a standard variable rate mortgage product (SVR). Those with a poor credit history may be concerned that they won’t be able to remortgage, but there may also be deals out there to accommodate you.
Why Would I Need to Remortgage?
There are numerous reasons to why you may want to remortgage your property apart from simply wanting to move onto a new deal when the old one is coming to an end. Below we have highlighted a few other popular reasons for remortgaging.
Remortgage to Pay off Debt
You might want to remortgage your property to pay off debt, either to help reduce your monthly mortgage payment by freeing up money to repay your other debts, or releasing the equity that’s in your property in a lump sum and using this to help repay your other debts. However this may not be the right option for you and we would discuss this with you.
Remortgage to Home Improvements
Another popular decision for homeowners is to remortgage to raise funds in order to improve their house rather than making a move to step up the property ladder to a bigger house. You can even look at remortgaging your self build project!
Home improvements such as extensions or loft and garage conversions that require a substantial amount of investment are a common cause for remortgaging, giving you extra living space without the associated moving costs and upheaval! Or the desire to upgrade the central heating, windows, kitchen or bathroom could be financed with a remortgage!
Remortgage to Raise Capital
It may also be possible to release some of the equity in your property for a variety of other purposes such as helping to fund a deposit for children to buy their first home, or buying an investment or holiday home.