For many homeowners, mortgage repayments represent probably the single biggest monthly outgoing. Saving on the cost of those repayments is widely welcomed. And remortgaging offers a possible way of doing just that.
Remortgages work on a simple principle – by providing the funds to pay off your existing mortgage, you are free to enter a new mortgage agreement which may be offered at a more attractive rate of interest or because a change might allow you to find a product more suitable to your current needs.
Remortgaging recently hit a seven-year of £6.4bn in April this year, proving how popular it is.
But paying less for your mortgage or changing its terms is not the only way you might use a remortgage to save money:
Arranging a remortgage is a serious step and one which may involve your entering a long-term financial commitment. It may also take a few weeks or more to arrange.
This is especially likely to be the case if you are looking to swap your existing mortgage with a new one – whether from a new lender or simply by changing products from your current mortgage lender.
There are a number of potentially complicated and involved issues to resolve and calculations to be made in order to compare your existing arrangements with any alternative remortgage offer, including rates of interest, the term of the loan (the number of years your existing mortgage has to run and the period over which the new loan needs to be repaid), together with the costs of setting up the new mortgage – which typically include legal fees for drawing up the agreement and fees for the survey of the property involved, and the penalty fee charged by most mortgage lenders for quitting the mortgage before the initially agreed term.