By admin 2020-10-26 16:23:05

Remortgage Explained


A remortgage is a process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. The term is mainly used commercially in the United Kingdom, though what it describes is not uniquely British.

Often the purpose of switching is to secure a more favourable interest rate from a different lender. The process of remortgaging does not usually involve moving home or taking out a second mortgage on the property. It is the transfer of a mortgage from one lender to another.

Homeowners may choose to remortgage for various reasons, including to reduce the size of repayments, to pay off a mortgage earlier, to raise capital, or and to consolidate other debts.

Homeowners often misuse the expression remortgage when they are merely switching from one product to another with the same lender. This is not a remortgage which involves the removal of one legal charge over a property and its substitution with another in favour of a new lender.


Consider a Remortgage


To some people, remortgaging might seem like a no-brainer. This happens if they have a good chunk of equity on their homes. However, the reason to save money should not be only when you have a lower mortgage.

There are many more factors you should consider when it comes to a remortgage such as the costs to remortgage and your living arrangement. This article will explain some of the things you should check before starting the process.


Date of retirement


If retirement is just around the corner, you would be better off taking a short term loan. Ensure it has lower interest rates so you have enough money to last you through your retirement.


Predictability


If you plan to stay in your home for an extended period of time, a fixed-rate mortgage would be an excellent option to first consider. Your remortgage payments can be lowered and you won't have to worry about increased fixed rates.


Cost of Remortgaging

Your remortgage may be offered to you with points and fees. Learn about your lender's cost of remortgaging by checking out their Good Faith Estimate and by making an application.

These points and fees may add up to thousands of dollars. You may find fees and points for loan origination, application, appraisals, escrow, inspection discount points and mortgage insurance.

These points and fees may add up to thousands of dollars. You may find fees and points for loan origination, application, appraisals, escrow, inspection discount points and mortgage insurance.


Cash-Out Refinance

Some people do cash-out refinancing to pay the credit card debts. They do this because it sometimes saves on taxes and the rates are lower. There is, however, a downside to this strategy.

At first, your debt is dischargeable in bankruptcy and unsecured, but once you do the cash-out remortgaging, the whole thing is no longer dischargeable and is now secured by your home.

Taking all the remortgage tips you can before you make any move will help you make wise decisions and save a lot of money and time. Get a remortgage quote today with Smartmortgages UK.

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