A re-mortgage is the process of changing your current mortgage to another mortgage or mortgage lender. This is done in order to decrease the amount of monthly payments you have. The idea is to save money. Many people opt for a re-mortgage when the value of their home has risen. In most circumstances, taking out a re-mortgage means changing lenders. However, this is not always the case.
The most common reason someone would leave their current mortgage lender is because other lenders are offering a better deal elsewhere. Quite often, a lender will promote their offerings to attract new customers and, in turn, fail to offer its current customers the chance to improve their deal. However, if you were to inform your current lender of your decision to re-mortgage to another lender, it may be that they will then be in a position to offer you a similar deal to what they are offering new customers.
One thing that you will have to consider is, if in the event of deciding to leave your current lender, what are the penalties that you will be eligible to pay? Will the new deal that you are being offered more than compensate these ‘penalties’? If so, then the new re-mortgage deal may well be worthwhile. If not, then you will need to consider your options. It may be that you will have to wait a little while longer (until the penalty period passes) before you can then re-mortgage. It is advisable that you consult your current lender to find out exactly when these ‘penalty’ periods are active and when they finish.
In some cases, it may be possible that other lenders will pay your penalty fee to your current lender in order to get your business. However, be sure to understand all of the costs involved and whether or not there will be any future costs to you because of this. The best type of re-mortgages is those that save you money, but do not tie you in to a strict contract.
To find out more details about a re-mortgage you can contact a local bank / building society or mortgage advisor or carry out your own research online where you will find many companies promoting their offerings.
Re-Mortgaging Costs
To begin with, it is more than likely that you will have to pay for another property valuation as well as the relevant solicitor / legal fees. There will also be charges placed for application fees, which will be charged by your new mortgage lender. However, as noted above, some lenders may cover certain costs in order to get your business. It is all about researching and finding the best deal to suit. Some may be great in the short term but prove costly further on down the line. Some may be more expensive to begin with but decrease in time so it is advisable that you look into all possibilities and find a deal that is suited to your own personal circumstances.
