If you already own a property and you take a new mortgage on this property, it is known as a remortgage. A common reason for remortgaging is to secure a new mortgage deal with a lesser interest rate than the current mortgage. Almost one-third of all the mortgages in the UK are remortgages. In this article, we look at remortgages in detail.
Remortgages can provide high savings to borrowers. Let's understand this through an example.
Example 1: You have a mortgage of £150,000. Let's assume the incentive rate period on your original mortgage deal is coming to an end, and you now will now have to start paying a higher interest of 4.49%. You can avoid paying this higher interest by going for a remortgage.
You find another mortgage lender, HSBC for example, is offering a two-year remortgage deal that is charging an interest of 0.99% for 24 months. So effectively for the next two years, you will be paying an interest of 0.99% as opposed to 4.49% in your existing deal.
Note that when remortgaging you should check your existing mortgage, sometimes the re will be an exit clause which requires you to pay an additional fee, there may also be an additional charge for the new mortgage to consider. We will look at the pros and cons of remortgaging during the next few articles, the kay factor is to understand the true costs of remortgaging so you can calculate how much you will save when remortgaging your home.
During the next 10 remortgage guides we will review the financial considerations you should make to ensure that remortgaging is the right financial move to make and you are fully prepared and access the best mortgage deal for you.
Next: Preparing to remortgage