Questions about remortgage:
What is a remortgage and what does it cost?
A remortgage is where you transfer your existing mortgage across to a new lender to benefit from a
lower discount, fixed or variable rate. However there could be costs incurred in transferring your
mortgage to a new lender. These could include some or all of the following:- legal fees; an
arrangement fee from the new lender; a redemption fee from your existing lender; a new property
valuation or a brokers fee. Some lenders offer a fee free remortgage where they will pay for
basic legal work, give a refund or pay for the valuation and waiver their arrangement fee.
However, as always you need to be aware of any hidden costs or extended tie in's after the
initial period, and make sure you are going to save money each month both in the initial
period and probably more importantly over the long term.
You also need to stay with the new lender through any new penalty period imposed by the new mortgage. This is especially important if you think you might move home during the tie-in period.
Can I remortgage to consolidate other debts? One reason for remortgaging might be to include loans that you have at a higher rate into your mortgage to benefit from the lower mortgage rate offered. You could also raise capital for home improvements, a deposit on a second home or for a variety of other reasons. All of course, provided you have the equity available in your home. You should be aware that although moving loans into a mortgage will reduce your monthly premiums, you will usually be paying more over the long term as a mortgage tends to have a longer life and you are paying interest over a longer period.
Before considering a remortgage it makes sense to ensure you that no exit penalties are being charged by your existing lender for redemption of a loan.