When you remortgage you switch your mortgage to a new deal, usually with another lender.
Remortgages can be used for various reasons. However, most people simply switch mortgages because it will work out cheaper for them. For example, the introductory Fixed rate may have finished with your current lender; therefore you could potentially get a new rate, or a lower APRC, with another lender. Another example is when you may need to re-mortgage to raise funds for home improvements.
If you do decide to remortgage you must take into consideration that:
The new lender may charge you an arrangement or booking fee even if they provide some other incentives such as a free valuation or free remortgage legal service.
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 remortgage.
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 at the end of the initial rate period although you still may have to pay an arrangement or booking fee.
If you are considering remortgaging to consolidate other debts such as personal loans or credit cards then please be aware that Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service these services may be more suitable for you.
Think carefully before securing other debts against your home. Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
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