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Re-mortgaging is when you move your mortgage to a different lender without actually moving home. Its Only Money has lots of information on remortgaging as well as information on the different mortgage lenders and mortgage brokers who offer remortgage deals. There are lots of different why you may wish to remortgage these include:
- To release equity in their property to cover home improvement costs. This may work out cheaper than a personal loan, as the interest rate may be lower.
- To consolidate existing debts such as credit card bills where the interest rates may be much higher.
- To simply obtain a better mortgage rate. Borrowers may save money by transferring their mortgage to a lender offering a more competitive rate.
A mortgage is most people's biggest financial commitment therefore it is important to regularly review it to ensure it is still appropriate for you.
Many people are not aware that they can move their mortgage to a different lender or know were to find a re-mortgage deal. MoneyeXtra Mortgage Comparison Service can help by comparing re-mortgage products currently available and putting you in touch with a lender. Alternatively you may wish to contact an Independent Financial Adviser to review your circumstances and to make a recommendation.Check your existing mortgage
Check your existing mortgage payment terms.
Redemption penalties (fees you pay for repaying the mortgage early) might make it not worth re-mortgaging at present.
Borrowers currently on fixed, capped or discounted mortgages may encounter penalties for moving mortgage. Some mortgage deals also come with 'overhangs'. This is were the borrower is 'tied' to the lenders standard variable rate for a period of time after their fixed, capped or discount incentive rate expires. This allows the lender to recoup the cost of providing the incentive.
Find a re-mortgage deal that suits you
Shop around the banks and building societies, or contact a mortgage adviser or mortgage broker who will help you search for a remortgage deal suitable to your requirements (You may be charged a fee for the advice you receive).
Before signing up to a re-mortgage you need to compare the savings it will make against your existing mortgage.
Take into account all costs and fees when working this out. If the savings do not cover the costs then maybe a re-mortgage is not for you.
Would a personal loan be more suitable? Click here for more information on personal loans.
Fees and costs
The fees and costs incurred for re-mortgaging are similar to buying a property. However, there will be no stamp duty to pay.
Likely costs and fees are:
- Lenders booking / arrangement fee.
- Valuation fee. A lender may however be willing to accept the original valuation report when you purchased the property.
- Solicitors / conveyancing fees. These might be lower than when you purchased the property as less work is involved.
Redemption fee. If you do not move your mortgage within the 'tie in' period a fee might be payable to your existing lender.Valuation and conveyancing
A lender will want to value your property, since it may have significantly changed since you originally bought it. This change in value could be through house price changes generally or through structural changes you have made to the property.
If however you previously had a full structural or homebuyer survey carried out, the lender may not require such a detailed survey again.
You will need to appoint a solicitor to conduct the legal work. The solicitors fee's might be lower than that charged for moving house as the work involved is much simpler.