Remortgage

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Your home may be repossessed if you do not keep up repayments on a mortgage.


Remortgages are taken out for 3 predominant reasons

Like for like Remortgage – The balance of the mortgage remains the same, however the aim here is to reduce the interest rate against the current mortgage in place, resulting in a lower monthly payment.

Debt Consolidation – The aim is to reduce the total monthly payments on all credit commitments. Quite often, when there are several credit payments, this becomes more difficult to manage, resulting in late payments and bad credit history. By having one monthly payment when consolidating debt into the mortgage, it becomes easier to manage.

Capital Raising – This can be used for raising money in order to carry out for instance; home improvements, to purchase a second home or an investment property, divorce settlements or a buy-out settlement with another party (who is currently on the mortgage)

Nonetheless, most people switch mortgages due to the fact it will end up being more affordable than moving on to the lenders standard variable rate which tends to be higher than the introductory discounted interest rate that the mortgage commenced with.

It is important to note that a remortgage isn’t always the best option, as your first port of call should be your current lender. Typically lenders will offer better products to attract new customers than in comparison to their products offered to existing customers. This is another reason to seek professional mortgage advice, if considering remortgaging.

When switching lenders, incentives are offered such as free legal service, free basic valuation and in some circumstances no arrangements fees, there is also a potential bonus of a cashback. This results in the client being in a better financial position with minimal costs occurring.

If or when you switch your mortgage, keep in mind the overall term, if longer than what is currently in place. The monthly payments will be lower, however the mortgage will be held for a longer period, resulting in more overall costs, due to the extended term of the new product. Likewise a reduced term will result in higher monthly payments and the mortgage being repaid early.

Also you may be able to switch your mortgage with your present lender, avoiding any unnecessary charges. Lots of lenders will enable you to switch your mortgage deal frequently and reasonably.

Securing short term debts against your house or home could have the impact of increasing the term over which they are paid and thus increase the overall amount payable

Think carefully before securing other debts against your property or home.

It is important to check when remortgaging that there are no early repayments that apply with your current lender.


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