Remortgaging

Low interest rates, rising house prices, and the increasing range of mortgage products available mean that there has never been a better time to review your existing mortgage arrangements.

To put it simply, there is a good chance you could save money by remortgaging.

Remortgaging means switching to a different mortgage deal. This could be with your existing mortgage lender, but more often than not it will be with a different bank or building society.

Until fairly recently, many people never bothered to remortgage, but over the past few years it looks like that situation has finally begun to change. According to the Council of Mortgage Lenders, in January 2003 (for the first time ever) remortgages accounted for more than 50% of the total monies advanced by mortgage lenders.

One of the most common reasons for remortgaging is to reduce costs. By switching to a lower interest rate you can either benefit from lower monthly repayments, or keep the monthly repayments the same, thus repaying the loan quicker and reducing the overall term of the mortgage. Anyone who is currently paying their bank or building society’s standard variable rate is likely to be able to save money by switching to a cheaper fixed or discounted rate mortgage with another lender.

Another reason to remortgage is in order to raise additional cash – also known as releasing equity.

Due to the rapid rise in property values over the past few years, many people now have mortgages which are well below their home’s current value. The difference between the property value and the mortgage debt is known as equity. The majority of mortgage lenders will allow you to increase the size of the mortgage in order to tap into some of this equity. The cash raised can be used for a variety of purposes, such as home improvements, holidays, a new car, or the consolidation of existing debts.

With interest rates at their current low level, it is not uncommon for someone taking out a remortgage to be able to borrow additional money against their property and yet still save money on their monthly repayments.

Unlike moving house, arranging a remortgage can be surprisingly hassle-free. There are no chains of buyers to worry about, so the whole process can often be completed in a few weeks.

In terms of costs there is no stamp duty to be paid, as you are not purchasing a property. Valuation fees and legal fees have to be paid, but many lenders will cover some or all of these for you as part of their remortgage offer.

In some cases there may be an arrangement fee from the new lender. There may also be redemption penalties on your existing mortgage and you will need to take these into account when assessing how much money you could save by remortgaging.

Your mortgage is probably your biggest single financial commitment, so it makes sense to spend some time ensuring you always have the best possible deal. The best way to do this is to seek advice from a mortgage broker or independent financial adviser, who can search the market to find you the most suitable remortgage deal from a wide range of different lenders.

Nearly all mortgage advisers offer an initial consultation free of charge and without obligation. So, why not check out your remortgage options today – you have nothing to lose and you could save yourself thousands of pounds in mortgage repayments!













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