Mortgage Loan

Remortgaging means switching to a different mortgage deal. This could be with your existing mortgage lender, but more often than not it will be with a different bank or building society. In times gone by, many people never bothered to remortgage, but it looks like that situation has begun to change in the past couple of years. According to the Council of Mortgage Lenders, in January 2003 for the first time ever remortgages accounted for more than 50% of the total monies advanced by mortgage lenders. One of the most common reasons for remortgage is to reduce costs. By switching to a lower interest rate you can either benefit from lower monthly repayments, or keep the monthly repayments the same, thus repaying the loan quicker and reducing the overall term of the mortgage.

Another reason to remortgage is in order to raise additional cash. Due to the rapid rise in property values over the past few years, many people now have mortgages which are well below their home’s current value. The difference between the property value and the mortgage debt is known as equity. The majority of mortgage lenders will allow you to increase the size of the mortgage in order to tap into some of this equity. The cash raised can be used for a variety of purposes, such as home improvements, holidays, a new car, or the consolidation of existing debts.

In the current market, it is not uncommon for someone to be able to raise an additional £20,000 against their property and still save money on their monthly repayments. Unlike moving house, arranging a remortgage can be surprisingly hassle-free. There are no chains of buyers to worry about, so the whole process can often be completed in a few weeks. Note, however, that once you have decided on the remortgage deal you will need a solicitor to help effect the transfer. Your new lender may provide and/or pay for a solicitor. The good news is that the legal process is much quicker for a remortgage than a purchase.

In terms of costs there is no stamp duty to be paid, as you are not purchasing a property. Many lenders will pay some or all of your valuation and legal fees. In some cases there may be an arrangement fee or booking fee from the new lender. There may also be redemption penalties on. your existing mortgage and you will need to take these into account when assessing how much money you could save by. remortgage Your mortgage is probably your biggest single financial commitment, so it makes sense to spend some time ensuring you always have the best possible deal. A mortgage broker can handle much of the hassle and advise you on remortgage deals where savings will outweigh any costs. Even if you are tied in to your existing mortgage with redemption penalties, it can often be worthwhile to consider a remortgage and switching to a new lender.

When applying for a mortgage or a remortgage, lenders run a credit check on you. This means they look into your previous credit history to establish how reliable you are in repaying sums of money. If you have defaulted on previous loans, have CCJ’s County Court Judgments, arrears or have experienced bankruptcy in the past you will have what is known as adverse credit. Adverse credit, otherwise known as bad credit or poor credit, will make it increasingly difficult to get a mortgage. Lenders will be reluctant to lend large sums of money to people who are seen as ‘unreliable’, with a high risk of not recouping the borrowed money. As a result lenders will either refuse your application, or charge higher rates of interest for adverse credit mortgages than they would for standard mortgages.

Many people with adverse credit find themselves in the ‘bad credit trap’. They have sorted out any financial difficulty they may have experienced in the past, but still cannot get a mortgage because of their poor financial track record. But because they are unable to borrow any money they are unable to build any ‘clean’ credit history. Once you have obtained a mortgage, if you keep to the lenders agreement and make your repayments on time, after three years your credit history will no longer be considered adverse. This means that you should be able to switch mortgage lenders otherwise known as ‘remortgaging and enjoy considerable savings on your monthly repayments.

A first useful step you could take is to complete our free, no obligation, secure enquiry form. Whilst many high-street lenders will refuse your application for a mortgage if you suffer from adverse credit, there are many specialist lenders who focus on adverse credit mortgages. Otherwise known as ‘sub-prime’ lenders, these lenders are your best chance of attaining a mortgage and our specialist brokers have access to all of them and once they understand fully your circumstances and what you are looking to achieve, they will research the market and help you choose the remortgage or mortgage that is right for you.