What is a remortgage
A remortgage can be when the terms of the original mortgage are renegotiated for whatever reason. One good reason to remortgage is purely to get a better interest rate deal than you are currently on, or when your current deal comes to an end if you are on a short-term fixed rate mortgage or tracker mortgage.
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Of course, you can remortgage to raise money by extending your home loan, though whether you can do that to raise more funds depends on how much equity you have in your home, but if your home has risen in value like many others have then you have a better than even chance.
Homeowners often remortgage to raise funds to pay for home improvements such as a loft conversion, a conservatory or another major project.
Some borrowers use a remortgage to consolidate other debts such as personal loans or credit cards, but it is always best to take professional advice on the matter before following this step because if you over-stretch yourself and fail to keep up with the repayments you risk losing your home.
Another reason for taking professional advice on whether to remorgage for this reason is that although the interest rate may be far lower than you're paying on your other debts, you are likely to end up paying more of it in the long term. This is because you're paying off your debts over the life of the mortgage which could be far longer.
You can remortgage with your current lender or another one if it's offering a better deal, and very often there is another provider who will have a better deal! The downside is that your property will usually need to be re-valued although your lender may help towards the costs of a valuation survey and legal fees.
We have been asked if anyone can remortgage, and sadly the answer is no, if you have insufficient equity in your home, or the current mortgage is close to the value of your home, then you'll find it hard to remortgage to raise that extra cash, and of course, if you are behind with your current mortgage payments then again, the answer will be No.
Is a remortgage worthwhile for you?
Well, if you are doing it for interest rate reasons, then you need to ensure that you will save money by doing so because the remortgage will undoubtedly attract legal costs as well as valuation and possibly arrangement fees. You also need to find out whether your old lender will charge you for paying off your old mortgage deal before moving.
So all that means that you will need to do a spot of homework to make sure the costs don't outweigh the value of remortgaging onto a lower rate, which is always a possibility if you've a small outstanding mortgage.
We strongly recommend that anyone contemplating a remortgage takes professional advice first, and we must also point out that if you fall behind with repayments, you will risk losing your home.