Remortgaging your property simply means you are changing your current mortgage to a different one, usually with another leader. Remortgages are used for various reasons. However, most people simply switch mortgages because it will work out cheaper for them. For example, the introductory discounted or fixed interest rate may have finished with your current lender; therefore you could potentially get a new discount rate, a new fixed rate or a lower APR, with another lender.
Common reasons for remortgaging
- To save some money. Often you achieve a lower or more suitable interest rate by remortgaging.
- Debt consolidation. To make your day to day living more affordable
- Breakdown in a relationship. Transferring a joint mortgage into a single name.
- Forming a relationship. Adding someone to a mortgage because you want to make a more financially binding commitment.
- Home improvements and extensions. Making necessary alterations to your property.
- Raising deposits. You can remortgage to raise funds for sons or daughters to use as deposits or for you to use as a deposit for your own buy to let purchases.
Is remortgaging the best option?
It is worth remembering that a remortgage is not the best option in all cases. Even if the lender you are considering switching to is offering a lower APR, 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.
- 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 your mortgage deal with your current lender, avoiding any unnecessary costs. Many lenders will allow you to switch your mortgage deal reasonably frequently.
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