What is a Remortgage?
A remortgage is a process that replaces an existing mortgage loan with a new loan from a different lender. The new lender repays the existing mortgage debt to the original loan provider. The borrower is then left with just one mortgage loan, repayable to the new lender. The terms remortgage and refinance are sometimes confused. While the two loan processes can be similar, there is one major difference. A remortgage involves accepting a loan from a new lender, while a refinance loan can be provided by the existing lender or a new mortgage provider. Borrowers consider remortgaging for various reasons. Often, the purpose involves saving money. Securing a new mortgage, at a lower interest rate than is afforded by the existing loan, may reduce the borrower’s monthly repayments. Obtaining a lower rate may also reduce the total amount of money the borrower must repay over the full life of the loan. Remortgaging can also serve to release equity in the borrower’s home. In real estate terms, equ
This is when the terms of the original mortgage are renegotiated, and usually means that the borrower increases the amount that they are borrowing, which is often possible due to a rise in the value of the property. A remortgage may allow the homeowner to repay other debts such as personal loans or credit cards, or it may be a way of paying for home improvements such as a conservatory a loft conversion. More about remortgages. Remortgaging may involve getting a better deal from your current lender, or it may mean changing lenders if a rival is offering a more competitive rate. The remortgage usually will involve a fresh survey of the property taking place, and an updated valuation of the property, which will take into account any changes in value due to home improvements, or due to fluctuations in the local or national property market.
A remortgage is a way of releasing equity from your existing home, in order to consolidate loans, to raise money for lots of different reasons (home improvements, buying overseas property, helping the kids with a deposit for their first home…), or simply to swap lenders to get a better (and cheaper mortgage).
