| Remortgaging |
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Remortgaging is basically replacing your mortgage with a new one whilst staying in the same home. As mortgage payments are the biggest cost that most homeowners face, you need to review your mortgage regularly to make sure you have the best deal. With interest rates starting to come down, now is a good time to think about remortgaging if you are on a high rate. The two most common reasons for doing this are either to take advantage of a more competitive mortgage offer, for instance switching to a low fixed rate from a standard variable rate; or to release some of the capital value, or ‘equity’, that you may have built up in your property.You can remortgage for the same amount that you owe in order to get a better deal. Furthermore, if you have lived in your home for several years and its value has risen, you will own a reasonable amount of equity in the property. You can remortgage your property for the higher value, pay off the smaller mortgage loan, and keep the remainder for your own use for instance school fees or home improvements. You can either remortgage with your current lender or move to a new one. But, given the current climate, before taking out a new mortgage, make sure that you know that you can get a loan elsewhere and that your property has not gone into negative equity – where you owe more money to your lender than your property is worth. You also need to know exactly what costs are involved and that it is worth your while going through the expense of remortgaging. The costs come from some or all of the following sources: arrangement and valuation fees for the new mortgage; early redemption penalty on the existing mortgage; any higher lending charge or mortgage indemnity (MIG) premium; legal fees; and local searches. So, you do need to compare how much you will save by remortgaging with how much it will cost. If you have negative equity in the property, you will have to find the additional amount of money that you owe on your old mortgage if you take out a new one. So, don't redeem it unless you really have to. And, don't forget, if the amount you are borrowing is more than a certain percentage of the property's value you may have to pay a one-off higher lending charge on the new mortgage. There are ways of keeping the expense as low as possible. If you remortgage the property with the same lender you may pay lower redemption penalties and arrangement fees. Also, the lender may dispense with some of the legalities involved, so you may save on your solicitor's bill. Even better, some lenders have special remortgage packages available whereby you don't have to pay any fees at all. Add this page to your favorite Social Bookmarking websites          
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