Are you still getting the best deal on your mortgage? Home.co.uk recommends that borrowers take time to review their mortgage regularly, not only to see if they can save money, but to ensure the terms you have agreed continue to suit your personal circumstances. It's certainly worthwhile as homeowners and landlords may find they can save hundreds, or even thousands, of pounds a year if they remortgage their property or get a better deal from their present provider or simply gain peace of mind that the deal they struck is still a good one.
What is also certain is that more and more homeowners are now switching lenders. In fact, so much so that the property finance industry refers to such savvy borrowers as 'rate tarts'.
Definition of Remortgage
"Remortgaging is the replacement of an existing mortgage with a new one. You may do this to save money. This might be possible by switching to another mortgage product with the same lender or by switching your business to a competitor. Remember, if you switch lenders, the saving you make on the interest rate you pay may be partially or wholly eaten up by the transaction charges associated with moving your loan." [Unless your new lender is willing to cover some or all of these costs.]
"There may be redemption fees and reservation fees demanded by your old and new lenders. The old lender may charge you a penalty while the new one an arrangement fee. The new lender will want to value the property just as your old lender once did. So there'll be surveyor fees, not to mention some conveyancing. And that means solicitors are likely to get in on the act once again. So, if you're considering a remortgage, do your sums carefully. You may find yourself facing the equivalent of several months mortgage payments, wiping out the benefits of remortgaging." - Home.co.uk Mortgage Glossary
Reasons for Remortgaging
Apart from the obvious potential savings to be made there are other reasons why you may wish to switch. For example, some people may be stuck with a mortgage term that runs on longer than the day that they want to retire. But not many people will have built up a pension fund large enough to provide enough income to pay for their chosen standard of living and keep paying off a mortgage. It may be that they need to remortgage to reduce, or even increase the length of their mortgage term.
So if you've been thinking about remortgaging, read our step-by-step guide to find out to go about it.
See also: Remortgage Advice
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