Guide to Remortgaging

Remortgaging is when you take the decision to switch to another mortgage provider in replacement of your current deal. There are many reasons that people make this choice, but the most... >>>more

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Guide to Remortgaging

Remortgaging is when you take the decision to switch to another mortgage provider in replacement of your current deal. There are many reasons that people make this choice, but the most prominent is that changing their deal is likely to save them money both on their monthly repayments and also on the amount of money that they would have to pay in total at the end of the loan term if they are able to find a loan with a lower interest rate. When you are paying a mortgage, it is almost certain that this will be the largest monthly payment that you will be responsible for, and for this reason it is vital to ensure that it is the best deal possible for you, particularly when you take into consideration the fact that you will be paying the mortgage for a number of years.
Who can get a remortgage?
Not everybody will be able to remortgage, and it’s important to understand whether you can or not before you try to get too far into the process. Borrowing money from lenders has become much more difficult since the economic crash, and this means that borrowers are constantly having to jump through hoops in order to get the money that they need. The main concern is the amount of equity that you have on your home. If you only have a small amount of equity, or you’re even in negative equity, then it is rather unlikely that you will be able to remortgage. In addition to this, your credit score will be taken into account. Your score is something that you can find out from companies online such as Equifax, and this will give you an idea of how you can improve your score – along with your chances of getting a good remortgage deal – in the future.
Who would benefit from a remortgage deal?
Generally, homeowners will start to look for a remortgage deal once their current fixed rate period has expired. This is because they may no longer be getting the very best rate on the market, and may therefore benefit from switching their mortgage to another provider. In addition to this, remortgaging is a popular method of debt consolidation – where existing debts are paid off using the capital gained from the remortgage of the property. Individuals could also benefit from remortgaging their home if they are looking for cash for things like home improvements – as they may be able to borrow against their home and extend their current mortgage over a longer period to spread the cost. There are many options, but a mortgage advisor East Kilbride based will be able to talk to you about these and explain your options in full.
 Types of remortgage deals
Similar to when you were given your initial mortgage, there will be two types of deals that you can choose from – a repayment mortgage or an interest only mortgage. Many people find that the type of mortgage that they were sold the first time when they bought their home was not the right one for their needs, and this may be the reason that they are choosing to remortgage further down the line. With a repayment mortgage, the entire sum owed is paid off at the end of the term, and the property therefore becomes legally yours, and is no longer tied legally to your mortgage provider in any way. When you choose an interest-only mortgage, however, your payments will only cover the interest accrued on your account, meaning that at the end of the mortgage term you will still owe exactly the same amount of money as you did when the mortgage was first taken out. If you choose to take this option, you will need to make other plans to pay the lump sum back at the end of the term, using some kind of investment plan. If you take this option, the mortgage broker East Kilbride based is almost certain to request details of this, so that they can be absolutely sure that you are going to be able to repay the loan at the end of the process.
 Summary
 Ultimately, if you are considering remortgaging your home, it is important to consider the situations in which this would be a good decision. Remortgages are most common with those who need to get a better deal on their current mortgage, consolidate debt, or free up money for other purposes. A mortgage advisor East Kilbride based will be able to give you the advice that you need in order to come to the right decision, and it is vital that you make the most of any information that you’re able to get about the process – as this gives you the best chance of choosing the remortgage deal that best fits your requirements.
 

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