A remortgage, often referred to as refinancing is paying off a mortgage with the profit from a new mortgage while using the same property as security for the loan. The lender of the new loan pays off the mortgage to the original loan lender. The borrower then has just one mortgage again that is repayable to the new lender.
Remortgaging and refinances are many times confused. The processes of the two loans are very much the same, but have one major difference: a bad credit remortgage is taking a loan with a new lender and a refinance may be provided by a new lender or by the previous lender.
Borrowers do consider a credit remortgage for many different reasons with the most purposeful and popular being to save money. A new mortgage with lower rates lowers the monthly mortgage payments and may also lower the total amount that is owed over the total life of the mortgage loan.
Besides the potential savings that can be made, there are also many other reasons why to apply for a adverse credit remortgage. Some homeowners may have a mortgage that’s length is longer than when they want to retire. But there are few people who have a pension fund that is large enough to cover expenses and mortgage once they have retired. This may cause a homeowner to need a fixed remortgage to lower or possibly lengthen the term of the mortgage loan.
A consolidation remortgage can also be used to release any equity that has built up in a borrower’s home. This is the difference between the amount that is still owed on the loan and the market value of the home itself. When a property’s value increases so does the equity. The equity will also increase as the loan is repaid. A borrower may use the equity of the home by remortgaging and borrowing a total amount that is more that the current mortgage debt.
Applying for an online remortgage is considered fairly easy and similar to any other type of mortgage loan. The new lender will first review the application of the borrower and ask for any needed paperwork. This may include debts, proof of income and expenditures. An evaluation of the home is typically required. Sometimes, this may be less intensive than what is required with the initial loan and a surveyor may be the one to simply look at the outside of the home and as some simple questions. In some other cases, a more full evaluation is needed.
There are some fees that are associated with a fixed rate remortgage. Many times, a borrower is required to pay for the evaluation and legal fees. Sometimes lenders also charge a loan-processing fee that the borrower is responsible for. The amount of fees within a fast remortgage does vary and differ between lenders. The average cost to remortgage a home every two to three years is near 2,675 pounds and most of this can be calculated into the new mortgage. There are some lenders today offering fixed loans with interest rates as low as 2.69% and others who are offering even lower rates to borrowers who are able to make a small deposit toward the new loan.
Usually, a bank remortgage can be obtained in four to six weeks and this depends on the lender and any certain situations that may arise. There are some lenders, however, who specialize in fast remortgages and commit to completing the entire process in just a week.
Benefits of Remortgaging
- Maximizing your amount of savings. You will be able to save a large amount of money with a cheap remortgage when the rates within the market are lower than your mortgage is.
- Reduction of monthly mortgage payments. You will reduce payments each month by extending the period of the loan, meaning switching to a new loan with the same interest rate but different term.
- Consolidating more than one debt. You can move your higher interest rate debts into just one mortgage loan. This process of combining debts into one will lower the total monthly payment you have on all of you debt.
- Having extra cash. The amount of money that is offered with a flexible remortgage helps to release equity built up in your home, in turn providing you with extra money to make repairs or necessary purchases.
Until recently, a low cost remortgage was popular for homeowners only to take out the equity that had built up in their home for things like home repairs or holidays. In today’s economic climate with lower home prices and higher rates, remortgages are no longer uncommon and are now being considered based on need rather than just a luxury.
Related Posts
