Remortgage Your Home

By remortgaging your home you are paying off your existing mortgage with a new mortgage from another lender. In general, the rules which apply to getting a mortgage will apply to a remortgage of your home: you will have to go through the same procedure of the application form, the valuation and legal fees. But with a remortgage you can, based on your experience with your existing mortgage, review the type of mortgage you want, repayment or interest-only mortgages with fixed, variable, capped, tracker or discounted rates.

Many people remortgage their homes to take advantage of lower interest rates or interest-rate deals offered by the new lender. A lower interest rate on the new mortgage means saving money with lower monthly repayments. Pay 1.5% less interest on your remortgage for a few years and you could save about £125 a month for every £100,000 of capital over the period of the reduced interest rate. Your existing mortgage provider may apply early-repayment penalties and, in general, how beneficial remortgaging is depends not only on the reduced monthly repayments but also on the cost of transferring your mortgage to the new lender. Some offer free valuations and other free services or reduced fees for transferring the mortgage to them.

Another reason why some people switch lenders and remortgage their homes is because of changing financial circumstances, for example, if they want flexible mortgages because they become self-employed, want to take 'payment holidays' or pay more or less in certain months, or pay off the mortgage before the end of the term. The cost of flexible mortgages may be higher but, depending on your mortgage agreement, this disadvantage may be outweighed by being able to reduce the capital outstanding whenever you are able to pay off more, with little or no redemption penalty so that the total payments may be less.