Re-mortgaging is when the terms and conditions of your loan (‘the charge’) on your existing property are changed. This can either be through your existing lender or through an entirely different lender.
It makes financial sense to shop around for the best terms when considering re-mortgaging your home. Indeed, it is a little like going back to the very beginning when you first obtained a mortgage. The usual criteria will apply when the lender assesses your eligibility to take out a new mortgage. A mortgage is a long term commitment. You may still be making repayments for years to come but that should not stop you from arranging the best financial deal which is personal to you using the opportunity to reduce your monthly repayments or the total cost of the loan.
When obtaining a re-mortgage your existing mortgage will be redeemed so you need not concern yourself with that one any further and a new loan with begin on terms that should be beneficial to your personal circumstances. Do consider whether your existing mortgage loan has any repayment penalties attached to it i.e. an early repayment costs. which could be from a few hundred pounds to a few thousand pounds.
If you wish to make improvements to your home or if you have other debts aside from your mortgage it is sometimes possible to consolidate them all into a new home loan by re-mortgaging. This can help you to spread the payments of your other debts over a longer time than with other forms of lending.
There are many mortgage lenders on the market and many different types of loans from fixed rate, discounted to tracker rate mortgages. When reviewing all of these you will need to make an assumption that there will be no change in the interest rates, that there will be an arrangement cost to the lender, and of course, any legal fees. For future reference, as with your existing mortgage loan, it is also important to compare the conditions of a new mortgage . Make a comparison and if the cost of switching to a new mortgage loan is more than the savings made then there is no point in re-mortgaging. If you want to change from an interest only mortgage to repayment then your lender may be happy to do this without going down the route of a re-mortgage.
The research can become somewhat daunting and if you may wish to investigate your options via a mortgage broker or financial advisor. They have a wide scope of information and knowledge on various lenders and loan products that are on the market which would make the whole process that much more efficient for you.
In finding the best mortgage deal there will likely be fees for the new mortgage such as the same fees when you originally set up your mortgage including legal costs, arrangement and valuation fees. Sometimes, however, lenders may offer cost free deals or attractive interest rates for re-mortgaging in order to secure the custom. Some lenders will deal directly with you and others will use their own solicitors, however, they will want you to obtain independent legal advice on the terms and conditions of your new mortgage loan. Make sure you have all of the facts in front of you and the comparison with your existing mortgage before making a final decision as it is important to think fully about your financial options as this will always be a long term investment.