Understanding Remortgaging With Ease

By Author: Lucy Carter
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Put simply, the act of remortgaging is refinancing your current mortgage though a new or existing loan provider. This can be a great way to take advantage of better offers as they become available on the marketplace. A remortgage is also useful in allowing you to consolidate your debts into one tidy monthly payment or free up extra cash.
As the financing marketplace is extremely competitive, new deals are constantly being offered, so it's wise to keep a watchful eye out and do your research on a fairly regular basis as you could end up saving a significant amount of money
The following guide give you some key information to bear in mind when shopping around, so you can decide whether a remortgage is the right choice for your needs and if so, find the best deal possible.

Calculate carefully
When considering a remortgage, it is vital to take the time to research and compare the wealth of options available on the marketplace. If you decide it's definitely the right time to refinance, the first step will be asking your existing loan provider for a 'Redemption Statement', which will clearly outline how much ...
... you still owe them on your mortgage. It's a good idea to find out at this point whether they have any incentive offers to keep you from switching to a competitor. Many lenders will be happy to do this so as not to lose a customer, in particular if you have a good payment history with them. While comparing different deals, always use a mortgage repayments calculator to be clear on whether the package will suit your monthly budget.

Beware the fine print
In many cases, the thought "it's too good to be true" is a valid red flag that should give you pause for caution. Some remortgage deals can seem unbeatable on the surface, but in fact have hidden costs that will give you a nasty shock. Although tedious, taking time to carefully read the fine print could save you getting into trouble. For example, some loan providers charge heavy penalties on switching to a better deal, which in turn might make you miss out on a much more suitable offering in the future. Other hidden charges to look out for are arrangement, valuation and legal fees. It's crucial to also be thorough in making sure a lender fully explains all the costs involved before going forward with your application.

Top remortgaging tips
The following points are some crucial considerations to remember when shopping around for a remortgage:

- The Standard Variable Rate (SVR) - this is the additional interest rate charged by your loan provider, calculated on top of the changing base rate set by the Bank of England. It's advisable to try find a remortgage package that excludes the standard variable rate, as an extra 2% - 3% more than the base rate this will add up to a significant loss of cash over the life of your loan. Be aware that some lenders offer packages that exclude the SVR, but when the deal expires you will often automatically be switched to paying the SVR charge. Many savvy home owners choose to remortgage at this opportune time to avoid the extra fee.

- Adjustable Rate Mortgage (ARM) - this type of refinancing loan is known at times to suffer alarming interest rate hikes, making this factor another good reason to take up a remortgage.

- Cashback Mortgage - these deals can be special offers given by lenders when you choose to refinance with them, rather than being a remortgage type in their own right. In other cases they involve freeing cash against the positive equity of your property.

- Fixed Mortgage - with this arrangement, you will have the security of knowing that your interest rate won't be subject to unexpected increases. The most common repayment periods are over either a 15 or 30 year period, with many people opting for the longer term to keep their monthly expenses from being stretched too far.

Remortgage Specialists - Advantages & Disadvantages
Understanding the wide range of remortgage types available can be highly confusing for those of us who aren't experienced or financially savvy - from flexible loans and fixed-rate deals to capped rate and tracker remortgages, each package has their particular characteristics which might or might not suit your needs. For this reason, many people are happy to pay the extra cost of a mortgage broker. Their expertise could end up saving you a significant amount of money since a reputable specialist will have the experience to choose the deal that best suits your needs and circumstances. In some more complicated cases they are highly recommended, such as when you've been gifted with a property. Your broker can then negotiate a remortgage based on the property's value, which means a percentage of this as an asset can be applied to your loan. Another scenario that benefits from the services of a specialist is if you want a remortgage to free up funds when you're near to retirement and will no longer have a monthly salary. A broker can be worth every penny in helping you to get the best deal possible for converting your positive home equity into cash liquidity. The main disadvantage to be on your guard against is affiliated remortgage specialists - this means they are not able to give you impartial, objective guidance and recommendations since they work with a set list of loan providers.

The above information will arm you with the fundamental facts to help you decide whether a remortgage is right for you. All in all, if you research the available deals on the marketplace carefully and weigh them with your particular circumstances, refinancing your existing mortgage loan could see you benefitting significantly.
Sean Raston - economics student and expert in the remortgage process.