There is a common saying that ďa change is as good as a rest.Ē This is certainly true with some borrowers who will find that by switching to a remortgage, they can be in more benefit and can save thousands of pounds a year.
Remortgage is the replacement of the existing mortgage with the new one. It means switching an existing loan with a new one from a different lender. In this type of mortgage the client already has a mortgage, but he may wish to transfer to a different lender. So it involves ending up of a current mortgage and starting of a new mortgage with a lower interest rate. This will almost always involve switching lenders. This is often a good option, as it cuts out the need for a new valuation and searches, and as a result reduces the cost of getting a new mortgage.
There are many reasons for choosing to remortgage
They are as following:
1. You want to save money on your monthly repayments.
2. You want to raise additional capital.
3. Your personal circumstances have changed and you want to consider a different type of mortgage.
4. You want to enjoy lower and discounted interest rates.
5. You want to consolidate existing loans into one monthly payment.
6. You want to release equity on your property.
7. You can move from a variable-rate deal to a fixed rate making it easier to manage your budget.
Remortgaging will almost always involve following steps:
Step 1: Deciding which of the mortgage products will bring you the most benefit.
Step 2: Once you have decided the product, you have to decide how much you can borrow.
Step 3: At this stage itís important that you need to borrow enough in order to repay your existing loan, including your repayment fees or any other fees your current lender may charge.
Step 4: If you are happy with the terms, you are now ready to apply for a remortgage.
Step 5: Upon receipt of your application form, the new mortgage lender will instruct a valuer to visit your property. The type of mortgage deal you are undergoing will decide the amount of fees charged by the valuer.
Step 6: At this stage you need services of the solicitor to help you with a legal procedure.
As a potential remortgagee you also have to budget for following things:
1. Current property evaluation.- In order to remortgage a property you must have it independently assessed to establish its current market value.
2. Solicitorís fees- Fees charged by a solicitor.
3. Loan Application fees.
4. Redemption penalty- It is penalty borrowers have to pay if they redeem their mortgage before the agreed term.
If you wish to remortgage then you may be interested in a:
1. Straight Remortgage for better rate.
2. Remortgage with capital raising.
Straight remortgage for better rate involves the knowledge of all the costs such as:
1. Setup costs.
2. Ongoing interst charges.
3. Redemption charges.
For remortgaging with capital raising you are subjected to special limits depending on how you wish to use the capital.
In truth, re-mortgaging is remarkably straight forward and 'hassle-free' process. However, if you are clear of important financial considerations and procedures required for its proper functioning, then you will be able to derive the best out of it.
If you have any other queries related to mortgage, feel free to visit this site http://www.mortgagefit.com
"About the Author - Lance Williams who wrote this article is an accomplished contributing writer presently working in association with http://www.mortgagefit.com/.He is a specialist in mortgage and real estate."
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