Remortgaging

Remortgaging is where you change the mortgage product that you already have. Remortgages can be for a variety of purposes. You may want to switch to a better rate, or even reduce your monthly payments. You might want to release equity from your home.

Reasons for remortgaging

Remortgaging can be used to financially help you in a number of ways:

Get A Better Deal

It could be that the current deal you’re on isn’t the best available, especially if interest rates have recently risen, or you’re on a Standard Variate Rate (SVR) mortgage. By switching your deal, you could get a better rate. It’s important to be aware of any early repayment charges (ERC’s). Early repayment charges are stipulated in your mortgage contract, and are fees due if you want to end your current deal early.

Remortgage For Home Improvements

Many people remortgage to make home improvements. Instead of taking out a loan, remortgaging could let you release funds from your home, to be repaid at a better rate. By releasing equity in your home, you could get the funds for an extension, or maybe a new kitchen. The added advantage is any improvements you make could add to the value of your home.

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Remortgage for Debt Consolidation

Remortgaging can help you to consolidate any outstanding debts. By repaying your other outstanding finance agreements with money from your home, you essentially make the repayments into your mortgage. Depending on the other finance, it could be at a lower rate. It may also be more straightforward.

How To Remortgage

The first thing to do when considering a remortgage is to check your current agreement. It will tell you of any early repayment charges or fees for making a switch.

It’s often sensible to consult with a mortgage broker. They review a number of products over a number of lenders, which saves you time and improves your chances of getting a better deal.

You may need to supply documents, like your bank statements or proof if income.

By considering the deals available to you, as well as the cost of getting out of your current deal, you can then weigh up if you’re going to save money on a better deal.

Remortgaging with bad credit

As difficult as it may seem, remortgaging with bad credit is possible. It’s likely that High Street lenders will be tough to get approved with, but specialist lenders are on hand to help. Mainstream lenders create mortgage products for the masses, but specialist lenders have products tailored to more specific circumstances.

Remortgaging pros and cons

  • Remortgaging lets you free up cash if you’re looking to fund an expensive purchase, or looking to ease any financial difficulties.
  • It can help you get a better deal on your current mortgage.

However, there are some risks that remortgaging presents:

  • Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
  • Remortgaging isn’t always straightforward, with new product fees and early repayment charges to be considered alongside a potentially better rate.

Remortgaging alternatives

There are other ways to release equity from your home, without remortgaging.

Second charge mortgages, or secured loans as they’re often referred to, are loans secured against your property. The reason it’s known as ‘second charge’ is because it’s the second priority to be paid, behind the mortgage (which would be the first charge).

You often need at least 15% equity in your home to qualify for a secured loan and because it’s secured against your home, there is a risk of repossession if you don’t keep up the payments.

Your home/property may be repossessed if you don’t keep up repayments on a mortgage or any other debt secured on it.

Maple Leaf Financial Services is a credit broker not a lender.

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