Re-mortgages
Remortgaging refers to the process of taking out a new mortgage on your property, either with your current lender or a new one, to replace your existing mortgage. People typically remortgage to take advantage of better interest rates, access equity in their home, or consolidate debt.
Types of Remortgages
1
Standard Remortgage
This is simply taking out a new mortgage to replace your existing one with a different lender or the same lender at a different rate or term.
2
Equity Release Remortgage
This involves borrowing against the equity in your home, often for purposes like home renovations, paying for large expenses, or consolidating debts.
3
Fixed vs. Variable Remortgage
Just like with a regular mortgage, you can opt for either a fixed or variable rate when re-mortgaging, depending on your preference for payment stability.
Reasons to Re-mortgage
In addition to the deposit, there are other costs to keep in mind when buying a home for the first time
Pros of Remortgaging
Better Mortgage Deal
You may be able to lock in a more favorable rate or a term that suits your financial situation better.
Access to Home Equity
If your home has increased in value, you can release some of that equity for things like home renovations or debt consolidation.
Consolidating Debt
If you have other high-interest debts, remortgaging can be a way to combine them into one payment, possibly at a lower interest rate.
Cons of Remortgaging
1
Fees and Costs
If you're still within the term of a fixed-rate mortgage or special deal, remortgaging may incur early repayment charges (ERCs), which could be costly.
Remortgaging can come with fees such as arrangement fees, valuation costs, and legal fees, which can add up.
2
Longer Term
While you may lower your monthly payments, remortgaging could extend the length of your loan, meaning you’ll pay more interest over time.
3
Risk of Over-Borrowing
If you're borrowing additional money (e.g., for home improvements or debt consolidation), there’s a risk of accumulating more debt than you can afford to repay.