A property remortgage takes place when homeowners decide to pay off their mortgage by obtaining a new home loan with the current property being used as collateral. Although there are a host of different reasons why a remortgage is arranged, the most common one is to provide the cash for home improvements, consolidating various debts and setting up a small business. If another lender is offering a better interest rate than the homeowners current mortgage then this can be a good reason to look to remortgage as well.
The remortgaging process does not, as a rule, require the homeowner to take out another loan alongside the first, or to leave their property, but rather the outstanding balance of the current loan is shifted from the old lender to the new one or to the same lender, but under a new agreement.
There may be other factors to consider, though, such as redemption and reservation charges as well as the possibility of a penalty fee from the current lender, when the remortgage shifts the loan to a new provider. The new lender may charge for the new arrangement, and there may well be new surveying and conveyancing costs when the property is assessed. All of this means that before deciding on whether to remortgage, the homeowner should carefully consider the costs and benefits of such a move.
The latest research shows that 2009 saw a sharp drop in the number of people who arranged to remortgage, especially among buy-to-let landlords: Figures from Paragon Mortgages found that in the final quarter of the year only 39 per cent of these people had switched their mortgage a result of low interest rates, which made the idea of shopping around for remortgages less attractive. Under current economic conditions, current standard variable rates (SVRs) are still looking good.
There is also the problem that buy-to-let deals are drying up due to the recession, which is leaving many landlords without the means to initiate a remortgage because lenders are calling for larger deposits or even equity stakes before they agree to a loan.
As a general rule, however, most advisors recommend that people with a current mortgage keep their arrangements under regular review and compare them to other deals in the market, enabling them to seek out the best terms and conditions in order to suit their personal situation and save money often running into thousands of pounds per year.
The remortgaging process does not, as a rule, require the homeowner to take out another loan alongside the first, or to leave their property, but rather the outstanding balance of the current loan is shifted from the old lender to the new one or to the same lender, but under a new agreement.
There may be other factors to consider, though, such as redemption and reservation charges as well as the possibility of a penalty fee from the current lender, when the remortgage shifts the loan to a new provider. The new lender may charge for the new arrangement, and there may well be new surveying and conveyancing costs when the property is assessed. All of this means that before deciding on whether to remortgage, the homeowner should carefully consider the costs and benefits of such a move.
The latest research shows that 2009 saw a sharp drop in the number of people who arranged to remortgage, especially among buy-to-let landlords: Figures from Paragon Mortgages found that in the final quarter of the year only 39 per cent of these people had switched their mortgage a result of low interest rates, which made the idea of shopping around for remortgages less attractive. Under current economic conditions, current standard variable rates (SVRs) are still looking good.
There is also the problem that buy-to-let deals are drying up due to the recession, which is leaving many landlords without the means to initiate a remortgage because lenders are calling for larger deposits or even equity stakes before they agree to a loan.
As a general rule, however, most advisors recommend that people with a current mortgage keep their arrangements under regular review and compare them to other deals in the market, enabling them to seek out the best terms and conditions in order to suit their personal situation and save money often running into thousands of pounds per year.
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