Remortgages reach record levels

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Research by the conveyancing firm LMS has revealed that the value of remortgages in the last financial year was at a record level of £6.4bn, making for an increase of 48% over last year.

Low interest rates and the increase in the value of housing have made remortgaging – the process of switching from an existing lender to a new one – an increasingly attractive proposition, and there are two main reasons to consider it.
The first motivation is to switch to another lender that offers a lower interest rate. Borrowers can then choose to either lower their monthly payments or reduce the length of the mortgage so that it is paid off early.

The other reason to remortgage is to raise money. If a property has increased in value, then remortgaging can be used to generate funds to pay for home improvements, children’s education or other high-value items. Remortgaging is often less expensive than taking out a separate loan for these items.

Remortgaging can also be used to pay off existing credit cards or other debts that are being charged at a much higher rate of interest than mortgage lenders apply.

Some people find that their home is too small as their family grows. Instead of moving, a remortgage can be used to finance a new home extension. Others remortgage because they want more features, such as better mortgage protection cover.

If you are a homeowner, be sure to consider whether switching mortgage lenders could save you money or enable you to release funds tied up in your house.

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