What Is A Remortgage?

A Remortgage (or a Refinance Mortgage) is simply a new loan that replaces an existing mortgage. This can be obtained through the existing lender or a different lender, depending upon the best remortgage deals available in the market at that time. Remortgages pay off the original mortgage and are used as a means of releasing additional funds.

So what is the difference between a remortgage and a secured loan? Both have a legal charge on the property in question, a remortgage will have lower rates than that of a secured loan, a secured loan can be arranged much quicker than that of a remortgage, the cost will also be higher to arrange with a secured loan. You can normally get a remortgage subject to certain criteria up to 90% loan to value, where as with a secured loan the maximum one can get is £100k and that is after affordability checks and whether or not you have sufficient equity within the property.

There are various forms of Remortgage which can sometime add to the confusion surrounding this form of financial assistance; Fixed Rate Remortgages tie you into paying a set interest rate for a specified period of time which allows for effective budgeting with monthly repayments that remain stable throughout the fixed rate period.

Those people who like to have a product that has low interest rates will most probably plumb for the tracker rate remortgage, this product will track The Bank of England base rate, if interest rates increase so will your mortgage payment to the lender, where as an offset tracker remortgage will link your current account with your mortgage account, instead of receiving interest on your current account this will reduce your mortgage account balance. This product is extremely popular with higher rate tax payers.

With such a increase of products available in the market place at this moment in time, we suggest that you seek advice either from a whole of market broker or an IFA, there are other types of product out there from buy to let remortgages, to variable rate remortgages, to numerous to discuss, speak to a specialist and get the best remortgage deals.

The Council of Mortgage Lenders has stated that in August 2009 lending for remortgages was only 25,000 this has dropped by 13 % on July's figure and 19% lower than that of a year earlier. The housing market at this moment in time is struggling along, the main reason for this is that banks have had no liquidity to lend, thus have had to go to the government with their begging bowls out, the Government and the UK taxpayers have had to bail out some of the banks, the others have just left the arena for a period of time and are waiting to come back in when the market has stabilised itself.

In October 2010 the banks started showing signs of recovery within the remortgage sector, loans had jumped a massive 35% in September 2010 and as a result the Remortgage market is becoming one of the most competitive markets with banks and building societies reducing interest rates to try and draw in the consumers.

Among the advantages of remortgaging is how it can help the consolidation of higher rate debts such as credit cards or car loans. Similar advantages include; remortgaging to take advantage of a lower interest rate, to release equity, to pay for remodelling or expansion of your existing home or to pay for large expenses such as a child's education or wedding.

Before you look at remortgaging, you will need to make sure that you have sufficient equity within your property, you will need at least 10% equity, there is also the credit score, check with Experian or Equifax and make sure that you have not missed any payments to any lenders that you have a credit agreement with. Banks are continually looking for people with a good clean state of affairs, they will refuse you if you have recently become self employed for instance as they will ask for two years accounts, you could have changed jobs and are on probation, something as simple as this will not get you a remortgage.

When looking for the best remortgage deals get some expert advice before making any financial decisions, let a professional help you, especially now lending criteria has made it increasingly difficult to place a remortgage. There are some many ways an IFA or whole of market mortgage broker can help you, they will take the stress away from the start and from the initial meeting you will know whether or not you are likely to place your remortgage with a lender. These professional may charge you for advice but it is well worth it, should they be able to place your remortgage with a lender, it will give you piece of mind and they may be able to save you money in other areas.


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Tim writes for Just Remortgages who specialise in finding the best remortgage deals for all their customers, as well as providing news and information on the latest remortgage rates available in the market.