Simply put, remortgage is when you transfer your existing mortgage agreement to another lender. This could be to get better interest rates or a better deal from your lender company.
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What is a remortgage?
Simply put, remortgage is when you transfer your existing mortgage agreement to another lender. So you as the borrower or mortgagor decide to make a mortgage agreement with a new lender or mortgagee. a remortgage will mean that the new lender company will pay the old lender company the balance of the amount that you owe and you will continue making your payments to the new lender company.
Why would I do a remortgage?
In some cases, people will do a remortgage because they are unsatisfied with their current lender company. Service levels do vary between companies and you may feel that your requirements will be better met by a different lender company or mortgagee.
However, with more and more companies becoming mortgagees, competition has become tight. There are many companies offering better interest rates than the next, better perks and deals. Thus the biggest reason for a person to do a remortgage is because of better interest rates. You might have acquired your first mortgage a long time ago and interest rates have changed greatly since then. You might have signed your mortgage agreement whilst the interest rates were exceedingly high. Either way, a remortgage has become very popular in trying to find the best interest rate. In the long run, a remortgage for a lower interest rate can save you great deals of money.
What should I be aware of before remortgaging?
It is true that a remortgage will save you a lot of money in the long run, however. It must be said that the actual process of moving your loan to a new lender company…the actual remortgage process…is quite expensive. Transaction costs and procedural costs incurred during the moving of your mortgage can be very high. Its recommended that you carefully assess your situation and decide whether a remortgage will be suit your needs. If you still have a large amount to repay on your current mortgage, then the savings you will make in the long run with a lower interest rate will be worth paying the costs of moving the mortgage. If however, you have only a few months left on your current mortgage, then in view of the remortgage transaction costs, it might be a wiser decision to stick it out with your current lender company.
If you decide that a remortgage will suit you, then have a look at our research on mortgage brokers to make an informed decision on your remortgage.