Remortgaging is when you change your existing mortgage deal to a new one, either by staying with your existing lender or by using a different mortgage company.
You don’t move home when you remortgage and the new mortgage deal is still secured against the same property. Essentially it is just a change in paperwork, nothing physically changes.
The more equity you have in your property and the less you are borrowing in relation to that value (called loan to value or simply LTV), the more competitive the interest rates available to you.
Who is Eligible to Remortgage?
As long as you meet the standard lending criteria of the mortgage company, such as having sufficient income to afford the amount you wish to borrow, you should be eligible in principle.
Some of the most common reasons you might consider remortgaging are:
- To get a lower interest rate on your mortgage
- To ensure your monthly payments are fixed each month and do not go up when/ if interest rates rise
- Raising an amount of cash for any particular purpose (such as pay for a wedding, a house extension, a new property etc)
- To consolidate your debts
Getting a better interest rate can potentially save you a significant amount of money and with interest rates at historically low levels and with so much competition in the market it is well worth considering speaking to a specialist to see what your options are.
Many people choose to remortgage so that they can consolidate all of their debts into one cheaper payment. This is often possible because the interest rates available with mortgage lending are often substantially lower than with other forms of borrowing, such as with credit cards or personal loans for example. It would be advisable to take specialist advice before deciding if debt consolidation could be a good idea for you.
May people want to improve their homes in some way during their lifetimes. For example, as your family grows you may need to build an extra bedroom or make an extension. Perhaps you want to have an elderly relative live closer to you and extending your property is an option. A remortgage can allow you to raise the funds to carry out the necessary building work and there is the added benefit that the value of your home could increase as a result too.
To find out how much you could generate and what your monthly repayments could be if you were to remortgage, try our remortgage calculator.