The Different Types of Remortgage

If your current mortgage deal is coming to an end or you need to borrow some extra money then it could be the right time for you to remortgage. Too many customers leave it too late and end up lapsing onto their lender’s Standard Variable Rate. If this happens then the chances are you are paying more than you need to be doing on your mortgage payments each month. 

Why Should I Shop Around for a Remortgage? 

If you rely on your current lender offering you a new deal you will be missing out on potentially lower rates elsewhere.

lenders love it when customers don’t shop around! They do not reward loyalty as a rule. They even offer better deals to new customers than existing borrowers. 

If you simply switch online without speaking to someone this is an Execution Only mortgage. That means you do not benefit from the consumer protection you would have got by taking advice. Again lenders love this because if it turns out you took the wrong product you have no grounds to complain since you picked it yourself. I have always felt that customers should always take remortgage advice when their remortgage is due. 

Some customers are still on really low rate tracker deals that they have had for years and years. Even so, it’s still worth having a look to see what is out there, especially if you are concerned that interest rates might go up. If you feel like that you can always take out a Fixed Rate Remortgage. 

Remortgage for Home Improvements 

If you feel your home would benefit from some upgrading then it is possible to remortgage for home improvements. Investing in your home can be a very good investment. Some improvements such as extensions or loft conversions can put value on your home. Kitchens and bathrooms can look tired after a few years and you can increase your mortgage to pay for cosmetic alterations as well as structural work. 

If the amount you need to borrow is significant then the lender will reserve the right to ask you for estimates for the works you intend to have carried out. You don’t necessarily have to use the Contractor that provided the estimate to do the actual works. 

Some people borrow for Home Improvements even if they know their home may not go up in value. If you have decided you are already in your “forever home” and if you can afford it, there’s nothing wrong with borrowing for this purpose at all. 

Capital Raising Remortgage 

When you remortgage to release equity you can borrow extra funds for most legal purposes, examples of this would be: 

You can raise capital on your property when you remortgage for almost any legal reason. This could be for large consumer purchases, gifts to help family members, to purchase a Buy to Let property or for Debt Consolidation. 

Remember you will pay interest on a remortgage for a lot of years normally so it’s really important you borrow for the right reasons. 

The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.

Debt Consolidation Remortgage 

When you add unsecured debt to your mortgage you may end up paying back more interest overall. This is because a mortgage term tends to be much longer than that of a personal loan (although it doesn’t have to be). 

The other thing you need to think about is that you are taking unsecured debt and securing your home. That doesn’t sit easily with everyone as you are under the risk of repossession if you cannot afford your mortgage in the future. 

You will need to know the interest rates that apply to the debts that you are considering rolling into your mortgage. If you have 0% credit cards then adding these to your mortgage will start attracting interest. 

You should consider all options before deciding to consolidate debts, such as asking family members for assistance if possible and reducing as much non-essential expenditure as possible. 

Once you have considered all of the above and decided a debt consolidation remortgage could be right for you then it’s vital you speak with a mortgage advisor. The advisor will take responsibility for the recommended remortgage advice and help you with your application. 

Often, consolidating debts into your mortgage leads to a reduction in your monthly outgoing. Some customers end up reducing their payments by hundreds of pounds.