Why Remortgage?

Why look at remortgaging? It is a way of either getting a new remortgage rate with your existing provider or to get the best remortgage deals available at that time via another lender. It will allow to you capital raise on a new rate either with your existing lender or the new one, subject to lending criteria.

So what is the difference between a remortgage and a secured loan? Both have a legal charge on the property in question, a remortgage will have lower rates than that of a secured loan, a secured loan can be arranged much quicker than that of a remortgage, the cost will also be higher to arrange with a secured loan. You can normally get a remortgage subject to certain criteria up to 90% loan to value, where as with a secured loan the maximum one can get is 100k and that is after affordability checks and whether or not you have sufficient equity within the property.

When looking to remortgage you will have various types of products that you can select from, the first one we are going to look at is the fixed rate mortgage, this will allow you to budget for a set period in time i.e. normally between 2-5 years, the payment to the mortgage lender will never increase during this set period.

So is it going to be a tracker rate remortgage? This is where you current interest payments will be lower than that of a fixed rate remortgage, as it has been for the last two years, but will inevitably increase as and when The Bank of England decide to increase interest rates, then you will have to budget carefully as interest rates could increase quite dramatically in the coming years. With this product you can actually get an offset tracker remortgage, this is especially popular with higher rate taxpayers, as instead of the higher rate taxpayer receiving the interest from the linked current account it will offset against their mortgage account, which is a great way of reducing your mortgage balance quicker.

This market place is changing on a day to day basis, more and more products are coming to the market place, but you need to be wary of what products are available as every lender has increasingly changed their criteria, so it is harder to get a remortgage in place. We suggest that you seek expert advice, either through a whole of market broker or an IFA, this way you will get the best remortgage rates possible.

The world wide recession has continued now for nearly 3 years, the housing market has been hit the hardest. Latest figures from the Council of Mortgage Lenders showed that remortgaging fell to it’s lowest ever level, with only 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier. With the effects of this credit crunch, capital within the housing market has dried up as most mortgage lenders stopped lending and others removed themselves from the market place, the Government has had to bail out some of the banks that have had severe financial troubles.

Now, you may not believe this when looking at the news, but in October 2010 banks and building societies had some great news in this recession of ours, lending for the remortgage market had increased by 35% in the month previous, this was a huge increase and has brought back the appetite to the banks and building societies as they are all looking for market share in this tough climate, they have brought down interest rates and the high admin fees that they charge to entice the first time buyers, home movers and remortgage clients.

Advantages of remortgaging can be in the form of lower interest rates for the home owner and taking advantage of consolidating higher paying debts such as credit cards, personal loans or even some of those Christmas shopping credit facilities that charge 30%. You could even look to release equity to pay for the house being extended if done in the right way will add value to your property, or even for a deposit for your children to buy their own home.

When remortgaging there are some issues and complexities surrounding this, For example following the downturn in the market place lenders have become increasingly reluctant to lend, they have tightened their criteria, for instance you may have changed jobs recently, you may have become self employed and no accounts to hand, your credit score could have altered due to a missed payment on an unsecured debt, something as trivial as this will not get you a remortgage.

Completion of that lengthy remortgage application form, this will require you to bring along all relevant documentation ID and address verification for money laundering purposes, have a credit score done online through either your local bank, IFA or whole of market mortgage broker, once this has been clarified all relevant information that you had brought along to the meeting will be sent to the lender for checking, once satisfied they will instruct valuation on your behalf, in the meantime your solicitor will be writing to existing lender getting a redemption statement so when the funds come through they will be able to pay off your existing liabilities, once this has been concluded the remaining balance will be sent to you. So if you want the best remortgage deals start searching now.

James writes for Just Remortgages one of the UK’s top sites for information on the latest remortgage rates, and best remortgage deals available in the market.

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