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When
you remortgage, you are switching your mortgage
to another deal, and frequently another lender.
Remortgages can be used for various reasons,
most people simply switch mortgage because
it will work out cheaper for them. |
For example, the introductory
discounted interest rate may have finished with
your current lender; therefore you could get a discount,
or a lower APR, with another lender. Other individuals
may use a re-mortgage to consolidate their debts,
if they take out their remortgage for a larger amount
than owed on the existing mortgage.
If you are looking to replace your existing mortgage
for one with lower repayments please fill out our
quick enquiry form.
It is possible to remortgage up to 95% of your property.
If you have already paid off a large proportion
of your mortgage, it may be better for you to consider
an Equity Release Plan rather than a re-mortgage.
Getting a remortgage is something that almost all
mortgage borrowers have to do, apart from those
that make enough money to pay off all of their loan
at once, or those rare borrowers who choose long-term
fixed-rate mortgages. The remortgage process is
relatively simple, and many borrowers remortgage
once every couple of years to get the best rates.
Studies have indicated that those who remortgage
regularly are likely to spend less on interest over
the life of their loans compared to those who allow
their mortgage to revert to standard variable rates.
Why remortgage?
Whether you have a fixed-rate mortgage, a tracker
mortgage or another type of discount rate, your
mortgage will likely be set at a special rate for
a limited period of time. Typical examples include
a two-year fixed-rate mortgage or a three-year tracker
mortgage. When this special period comes to an end,
mortgage holders have to choose a new deal or their
mortgage will revert to the lender’s standard
variable rate, usually considerably higher than
special deals.
How does a remortgage work?
Mortgage holders search for the most competitive
loan possible to choose where to remortgage to.
Depending on the near future, different mortgage
products will represent better or worse value, and
it is up to the consumer to predict this or rely
on an independent financial adviser.
For instance, if interest rates are to climb during
the special deal period, a fixed-rate mortgage will
protect the borrower from rate rises and ensure
a guaranteed level of repayments. However, if interest
rates are going to fall, a tracker mortgage will
follow Bank of England base rate down, potentially
providing cheaper mortgage repayments. Other special
deals such as variable rates and discounted rates
may represent good value for some borrowers. |
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