UK Remortgage
The process of remortgaging is, put simply to switch your mortgage
scheme, often to a new lender, but not necessarily. In an attempt
to coax borrowers away from other lenders, mortgage brokers will
offer discounted interest rates wrapped in to their introductory
offers. In recent years the remortgaging market has boomed, as
increasing numbers of people have become aware of the advantages
of moving their home loan to a new lender, knocking thousands
of in interest over the life of the loan. Though you may find
some very good reasons for sticking with your current mortgage
lender.
 
There are three main reasons for you to consider remortgaging:
- The first reason to remortgage would be simply to release
value that has built up in your property, perhaps as a result
of rising house prices. In this instance you would take a new
mortgage for the value of the property, not just the amount
you owe your existing mortgage lender. This can be a good option
for people who want to obtain a large amount of cash with interest
charged at the mortgage rate.
- Another reason to remortgage is to fix the rate you are paying
on your loan (see fixed rate mortgage). While interest rates
may still fall, it is more likely they will stay where they
are and they may even begin to rise.
- The third reason to remortgage is if your special offer period
has ended and you are now paying a lender's standard variable
rate (SVR) you could probably get a lower mortgage rate elsewhere.
In fact, you have probably even seen your mortgage lender offering
a better rate to new clients. By moving to a lower rate you
will cut your monthly mortgage repayments.
If any of these reasons make sense to you the next step is to
work out the cost to remortgage - and whether then it is still
worth your while. Look over your current deal to find out if there
are any redemption penalties. Also find out from your mortgage
broker if you are in a negative equity position. In the unlikely
event that you are, you should think twice about moving your loan
because you will have to find this money before you can move.
The next thing to bear in mind is the cost of the new mortgage:
alongside a possible arrangement fee for the loan, there may be
legal fees to meet, the price of a new valuation and the cost
of local authority searches. It all depends on your mortgage lender.
You may choose a deal without an arrangement fee, which will save
you money. If you have had a valuation done recently the new mortgage
lender may be willing to accept its findings. Or you may find
a lender willing to pick up the tab for the conveyancing and the
survey.
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