With remortgages, you are switching your mortgage to another deal, and usually another lender. There are various reasons to remortgage your property. However, most people simply switch mortgages because it will work out cheaper for them. For example, the introductory discounted or fixed interest rate may have finished with your current lender. Therefore with a new lender, you could get a new discount rate or a lower APR. Another example is when you may need to re-mortgage to consolidate debts.
It is worth noting that remortgages are not the best option in all cases. Even if the lender you are considering switching to is offering a lower APR. You must take into consideration the facts that:
- If you switch mortgage remember to look at the overall repayment period. Your monthly payments may go down, but check the final repayment date of the mortgage as well.
- The new lender may charge you for valuation and solicitors fees. This can happen even if you have already paid these for your mortgage with your current lender.
- You may have to pay an early repayment charge to your existing lender if you re-mortgage.
Also, you may be able to switch your mortgage deal with your current lender. This will avoid any unnecessary costs. Many lenders will allow you to switch your mortgage deal reasonably frequently.
Securing short term debts against your home could increase the term over which they are paid. Therefore increasing the overall amount payable.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.