A remortgage is just like taking out a normal loan, with one main difference. You are raising money to pay off the old mortgage - at a better rate, for greater flexibility or for a specific purpose. You don't have to change lenders, but many do.
Benefits include:
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Saving money - by reducing your monthly outgoings. Speak to an adviser now!
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Reducing the loan - being able to overpay without redemption penalties.
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Releasing equity - to make improvements, take a holiday of a lifetime or buy a second home.
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Switching to a more competitive lender or product - for example, if your current rate is too high or you have concerns over an endowment mortgage.
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Greater flexibility - by switching to a scheme which allows you to underpay, overpay and have the means to release equity.
Costs and penalties
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You cannot use the original survey - so you will be charged
for a new one.
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Budget for legal and administration fees - although they should
not be a high as your original loan. Many lenders now offer
deals which refund these costs on completion- provided you use
their recommended surveyors and solicitors.
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Beware of redemption charges on your existing mortgage if
you are still within an introductory offer period with a fixed,
discounted or capped rate of interest.
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Some loans also have an overhang period after the introductory
time.
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Weigh up the savings against any costs and penalties. It can sometimes be worth paying these for the benefit of the new loan.
Timing
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It takes less time because you're not buying a home - around six weeks.
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If you need to act quickly, you may find a fast track service to complete in a week.
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Try and avoid two sets of interest charges. If you are remortgaging with a lender who charges interest to the end of the month, you should remortgage on the first of the month.
