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You may well have heard of remortgaging but never fully understood what it means. In layman’s terms, remortgaging is when you look to move from one mortgage deal to another, either sticking with the same lender or moving to a new one.
A mortgage is likely to be your largest financial commitment lasting you many years, but you don’t necessarily have to stay on the same mortgage as the one you initially took out, as your personal circumstances may, and probably will, change over the years, giving you a reason to remortgage.
Just as you did when you took out your first mortgage, it’s important to reevaluate your finances every now and then, and consider all your options in order to know you’ve got a mortgage that is right for you at that moment in time.
Just as you might shop around for the best broadband deals and the cheapest energy rates, the same applies to your mortgage. You can shop around to see if there is an opportunity to save money.
If you do find a cheaper mortgage rate, you could end up switching onto the new mortgage deal, and this is what’s known as remortgaging.
Before you decide to go ahead and switch onto a new mortgage deal, it’s worth weighing up a few things first:
Your outstanding mortgage is £100,000. Your property is valued at £250,000.
100,000 divided by 250,000 is 0.4.
0.4 x 100 = 40
So your LTV is 40%
There are various different reasons why people choose to remortgage. Some of these might include :
For instance, you may have initially taken out a fixed rate mortgage where you pay the same amount every month and the interest rate stays the same. However, once this initial period has ended (it could have been a 2,3,5 year fixed) you will fall onto a standard variable rate (SVR) where you could end up paying a higher interest rate than you were previously. This is usually the time when many homeowners look to remortgage in order to switch to a better mortgage deal.
If you’re keen to remortgage your home, you should take advice from an independent mortgage broker who will be impartial and have access to a wide range of products on the market. Call us on 08454 500200 or click here to make an enquiry.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is £595.