Looking to Remortgage?

The term 'remortgage' simply means to replace your existing mortgage.

Reasons to Remortgage
People remortgage their properties for a variety of reasons including:

• To reduce monthly repayments: If you have had a mortgage for a number of years you will almost certainly be able to reduce your monthly repayments by remortgaging, either with your existing lender or with an alternative mortgage provider.
• To fund a home extension: If you are happy with the location of your home but need additional space, adding an extra room or two to your home is likely to be much cheaper and less traumatic than moving house. If you have built up some equity in your home since you took out your original mortgage and have been reliable in making mortgage repayments, you should have little problem in obtaining a remortgage to pay for an extension to your home, whether it is an extra bedroom, bathroom, home office, conservatory or garage.
• To consolidate debts: Although incredibly convenient in so many ways, credit cards are a very expensive way of borrowing money. If you have credit card debts or other unsecured loans, remortgaging can be an effective way of consolidating borrowings into a single loan, at a lower rate of interest than that charged by the credit card companies. However, you need to be disciplined with your credit card spending, if this method in of refinancing is going to be successful in the long term. Adding ever increasing debts to your mortgage every few years by remortgaging is not an advisable strategy for lasting financial peace of mind.

Competition is keen between financial institutions in the remortgage sector so it certainly pays to investigate the options available from different lenders, before making your decision.

Types of Remortgage
When financial institutions first introduced remortgage deals, they often attached stringent conditions to them. Nowadays, many mortgage providers' remortgage options closely resemble their mainstream mortgages, with a choice of standard variable rate (SVR), discounted rate, tracker, capped rate and fixed rate options.

Remortgaging Costs
Although remortgaging is relatively straightforward, the costs involved cannot be ignored. You might have to pay some of all of these remortgage costs:

• penalty for early termination of your existing mortgage;
• remortgage arrangement fee;
• property valuation fee;
• higher lending charge, if borrowing at a high loan to value (LTV) ratio.

Because borrowers are remortgaging more frequently, some mortgage providers have increased these remortgaging fees in an attempt to try to preserve their margins.

The one major cost that you can avoid by remortgaging is Stamp Duty, because you are not moving to a new property. Similarly, you will not be liable for estate agents' fees or other costs associated with selling a house.

As with any other major financial transaction, it always pays to read the small print carefully, in order to avoid unpleasant remortgage surprises.

If you are looking to get a remortgage FancyAMortgage.co.uk can help by offering unbiased overviews on available products as well as providing mortgage comparisons. By : Paul Giles