Why Remortgage?
So what is a remortgage? Simply a new loan that replaces your existing one. You can either stay with the same lender and get a new rate or apply to a new lender dependent on the remortgage rates available in the market at that time, and the best remortgage deals available to the individual. A remortgage will replace the original one and are used either to get a new rate or a means to raise capital.
Sometimes consumers can confuse the difference between a remortgage and a secured loan, both loans have a legal charge on the property. A remortgage can be used for most things like capital raising normally any purpose up to a maximum 90% loan to value, where as a secured loan will normally only allow you to borrow up to 70-75% loan to value, an addition to this is that the maximum that one can borrow is 100k, where as a remortgage will allow you to borrow as stated earlier 90% but you must have a clean credit score and income to support the new loan.
When looking at a remortgage there will be certain factors one has to over come, the first one would be knowing what product to select, in this case we will look at fixed rate mortgages. This type of product will guarantee that you will know how much you will pay on a monthly basis, this will help when budgeting. You will normally be tied into this product for a set period all depending how long you wish the guarantee to stay in place.
Those people who like to have a product that has low interest rates will most probably plumb for the tracker rate remortgage, this product will track The Bank of England base rate, if interest rates increase so will your mortgage payment to the lender, where as an offset tracker remortgage will link your current account with your mortgage account, instead of receiving interest on your current account this will reduce your mortgage account balance. This product is extremely popular with higher rate tax payers.
This market place is changing on a day to day basis, more and more products are coming to the market place, but you need to be wary of what products are available as every lender has increasingly changed their criteria, so it is harder to get a remortgage in place. We suggest that you seek expert advice, either through a whole of market broker or an IFA, this way you will get the best remortgage rates possible.
The world wide recession has continued now for nearly 3 years, the housing market has been hit the hardest. Latest figures from the Council of Mortgage Lenders showed that remortgaging fell to it’s lowest ever level, with only 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier. With the effects of this credit crunch, capital within the housing market has dried up as most mortgage lenders stopped lending and others removed themselves from the market place, the Government has had to bail out some of the banks that have had severe financial troubles.
In October 2010 the banks started showing signs of recovery within the remortgage sector, loans had jumped a massive 35% in September 2010 and as a result the Remortgage market is becoming one of the most competitive markets with banks and building societies reducing interest rates to try and draw in the consumers.
So what’s the advantage of remortgaging? Well it can help in the consolidation of higher rate debts, such as car loans personal loans and even credit cards, similar advantages include the benefit of lower interest rates, to release equity to pay for school fees, weddings or even the house being extended.
When remortgaging there are some issues and complexities surrounding this, For example following the downturn in the market place lenders have become increasingly reluctant to lend, they have tightened their criteria, for instance you may have changed jobs recently, you may have become self employed and no accounts to hand, your credit score could have altered due to a missed payment on an unsecured debt, something as trivial as this will not get you a remortgage.
When discussing a remortgage, whether it be through your local bank, an IFA or a whole of market mortgage broker, there are various steps involved, you would have done most of these when your originally bought your property. An application needs to be completed with one of the above, this will take time and effort on your behalf, property needs to be valued, lender will require conveyance work to be undertaken, this will be done by either your own solicitor or one given to you by the lender, previous lender will be paid in full and any other monies due to you will be released to you once account has been settled. The cost of remortgaging can vary dramatically, so get searching for the best remortgage deals.
James writes for Just Remortgages one of the UK’s top sites for information on the latest remortgage rates, and best remortgage deals available in the market.
categories: mortgage,house,home equity,property,investment,refinance,remortgage,debt consolidation,insurance,home owner
