What exactly are Remortgages? A remortgage is simply the process of taking out another mortgage on the same house with the funds from another existing mortgage. Anywhere where a mortgage is taken out the payments include the outstanding balance of the original mortgage plus any interest, or other charges.
Remortgages can be taken out for different reasons. One reason is for home improvement, like repainting the house, buying a car etc. Another reason a remortgage can be taken out is to pay for the cost of an extended stay in a hospital. If you take out a remortgage, your existing mortgage is usually paid off but a fresh mortgage is taken out for a longer period of time at a lower rate of interest, this may reduce your monthly repayments somewhat but if you make your payments on time, your financial situation should be much better in a year’s time.
So, what are remortgages and what are the factors that affect them? Generally speaking, there are two factors that affect remortgages. These are the type of mortgage being taken out, and the lender who are looking to lend the money. It is important to understand what these factors mean and what is best to do in order to get the best buys when looking for a remortgage. Here are some tips that should help.
First of all, if you have an interest only or repayment mortgage you will almost always get a better deal if you sell the house before your period for repayment expires. In addition, this applies to mortgages taken out under the provisions of a plan. For example, a payment holiday is usually a good way of improving your circumstances as it lets you keep your original price while making some payments. If you are happy with your current lender, then don’t bother looking for a remortgage from another lender. Lenders have to follow strict guidelines and they would be very unlikely to provide you with the best deal.
Next, if you are happy with your current lender, and remortgaging seems like a good idea then there is one other thing to consider. One of the big factors that affects remortgages is the level of early repayment charge that your lender charges you. The longer you can delay paying back the money, the cheaper the monthly repayments become over the course of your mortgage term. The longer you can delay the repayments, the more interest you will pay over the term. It therefore makes sense to find out how much early repayment charge your current lender charges and how much you could save by switching lenders and delaying your repayments.
A third consideration when choosing a remortgage that might affect your current deal is how easy it is to get a second mortgage. If you own your own property, then the odds are that your mortgage company will be happy to remortgage you on the current deal. However, if you owe money on any property or have any debts, then you might want to find out whether you can qualify for an alternative remortgage. If you own your own home but owe money on anything else, then the first thing that you need to do is find out what the terms of your current deal include. Many remortgages will only allow you to remortgage on the amount of debt you currently owe, so in effect you will lose any savings that you have already made by paying down the loan.
Remortgages are great for those people who are willing to commit to long-term repayments because the initial rate of interest is normally lower than that offered by a standard mortgage. This is because, when you are remortgaging, your mortgage provider will agree to a lower interest rate in order to encourage you to stick with the loan. For this reason, many people choose to take a remortgage in order to free up some cash. The disadvantage of this is that because your monthly repayment is higher, you will end up paying more over the course of the mortgage term. As such, those who are planning to move at a later date may want to think about whether they could get a cheaper interest rate or find another type of lender.
Lastly, people who own their own home and want to get a better deal on their mortgage might want to consider looking into no-obligation quotes. These quotes offer you the ability to remortgage without taking out any other form of a loan. In many ways, these quotes are like a standard quote for your existing mortgage, but they do not come with any fees. This can be a very good way to remortgage your home and increase the amount you would pay, however, you might want to check out the fees involved before taking advantage of this option.