What Is a Remortgage – No Guarantor Loans
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What Is a Remortgage

What Is a Remortgage


Remortgage- What It Is & Why You Should Go for It

At the time of looking for property on sale, most people also look for mortgage deals. The Web can be really useful in providing all information about the various lenders, their principal amount and interest rates at the click of a button. They look at what lenders are offering and compare deals suitable for them with a mortgage calculator. Then they buy the house and start making monthly mortgage payments. However, after sometime, borrowers may feel the need for a remortgaging.


What Is the Meaning of Remortgage?

After a few years of making fixed mortgage payments, many people think of asking their lender for a new deal in place of the existing one. They may even think of changing to a lender charging a lower interest rate. A mortgage runs for many years and it is not necessary that you should stick to paying a higher interest for years. It makes sense to change either your existing deal or your provider for a new one. Many people don’t know that remortgaging is actually done by clever people in order to save money.


What is Remortgaging?

Remortgaging is basically changing your original mortgage deal or your lender. People always want to take advantage of new offers. A remortgage is an excellent way to do that. It actually increases your savings in the long run. You don’t move house when you are remortgaging. You simply take a new mortgage on the same house you’re living in. There are a number of reasons why homeowners would shift:


  • To pay lesser interest from their pocket
  • To protect themselves from a future increase in rates
  • Make repayments that don’t change
  • Raise funds and renovate their home
  • To convert equity in their property to a cash lump sum
  • To consolidate debts


Equity is the difference between the market value of your home and outstanding loan payments thereon. Loan to Value (LTV) is the amount of home loan you’ve taken, calculated as a percentage. The greater the equity you have and lower the Loan to Value (LTV), the cheaper interest rates you can get.


Is it Smart to Remortgage?

Remortgage is a smart way to save thousands of pounds and put it to better use like taking your family on an overseas trip. It’s very common these days to change your existing package for a better one, instead of sticking to the same loan. Gone are the days of people sticking to one lender as if they were loyal to them. Now, you just remortgage. You shop around for the best deals and probably also take advice from a qualified financial expert. This way, you know what you’re getting into and won’t regret your decision later. Some common money-saving reasons  are:

Interest rates matter!

Usually, when you take out a new mortgage, lenders will attract you with introductory deals. These deals offer a low and fixed interest rate or low tracker interest rate for the first two to five years. A tracker rate moves along with the rise and fall in the Bank of England base rate. When your introductory deal is over, you’ll be moved to the lender’s SRV (Standard Variable Rate) which will usually be higher than most other mortgage deals. Then what you do is look at the market to see whether there’s any deal that can save your money. However, you should bear in mind that if only a small mortgage amount is outstanding, it’s better to pay it off than making a switch.

Being flexible

There’s nothing like flexibility. Remortgage is an excellent option if you want to overpay. For example, you find that your salary has increased and you can afford to pay off the mortgage quicker. Or maybe you wish to switch to a current account offset mortgage because you want to use your savings to reduce the amount of interest. A flexible deal allows you to achieve this.

Consolidating debt

You can also use a remortgage to consolidate debt. Consolidation means borrowing a new loan and using to pay off all the old loans. This is a good option especially if you have many loans that you can’t keep track of. You might end up paying more overall even though mortgage interest rates are lower than those of personal loans or credit cards. It would do good to make a list of your loans in order of priority and start paying them off.


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