Remortgaging is the process of arranging a new mortgage on the property that you own. It can be used to replace a mortgage with one at a better rate of interest, or it can be used to borrow more money.
Last April, British lenders lent a record £4.7bn in remortgage loans, which was a 36% increase on the figures in March. The rise is partly due to lower interest rates; the average interest rate in February 2016 was 2.51% and this fell to 2.49% in March.
One of the main reasons to remortgage is to switch to a lender offering a lower rate. Many people take out a mortgage at a low introductory rate which lasts from two to five years. When the deal comes to an end, the interest can rise sharply. It then makes sense to look for a cheaper rate.
If the value of their house has gone up by a large amount, then a borrower may want to take on extra money for purchases like a new car or property repairs. An existing mortgage lender may not allow this, but an alternative lender may offer a remortgage loan for high-value items.
A fee will usually be charged for paying off an existing mortgage, and this needs to be taken into account when considering remortgaging.
Talk to a mortgage broker for advice on the best deals and the advantages of mortgage and income protection so that your home is safe if you become unemployed due to unforeseen circumstances.
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