Remortgages explained

In 'Remortgages explained' we'll also discuss possible reasons to remortgage, potential remortgage advantages, as well as remortgage disadvantages for a balanced view. Finally, we'll also take a look at how Shire Direct can help with a Remortgage, even in the trickiest of circumstances! So, as the saying goes, 'Are you sitting comfortably?...'!

Table of Contents:

So in 'Remortgages explained', we'll try and explain Remortages, what they are, and how they work, together with when a remortgage may be an appropriate solution, as well as potential remortgage advantages and disadvantages.

What is a Remortgage?

Right, let's start with the basics first of all. The most obvious question that springs to mind then is 'What is a Remortgage?'.

Well, quite simply, a Remortgage is the act of replacing your present mortgage with an entirely new mortgage, possibly from a different lender, or possibly just a different mortgage scheme from your current mortgage lender. This process may also be termed as 'switching your mortgage'.

A remortgage is a paper transaction, so you don't have to move house to move your mortgage, but obviously you must have an existing mortgage to obtain a remortgage.

Which probably begs the question 'Why on earth would I want to replace my existing mortgage with an entirely new one?!'. And a good question it is too! There are a number of reasons as to why you may want to consider a remortgage, which we'll investigate next.

Why remortgage? The advantages of remortgages

It's a matter of fact that the number of borrowers switching their mortgage to a new deal from a different lender has trebled in recent years. Why? Well the main reasons include:

1. To save money

It is now becoming increasingly clear that a borrower currently paying their lender's standard variable rate could save themselves thousands of pounds in interest charges by switching to a more competitive deal - whether it be a Fixed Rate, Discount Rate, Offset or Cashback Mortgage scheme.

As professional mortgage intermediaries, Shire Direct has an extensive range of lenders to match your requirements to a suitable mortgage product for you!

2. To Refinance

Recent increases in the property market have left many homeowners sitting on a fortune! Releasing some of the collateral could ease many a family budget by providing the platform to pay off expensive unsecured borrowings on credit and store cards, HP and personal loans. And it's worth remembering that some unsecured credit continues to be charged at 20% APR or more!

There's no need to pay expensive rates of interest on credit cards, store cards, personal loans etc. when you can consolidate them all into one manageable monthly repayment with a remortgage from Shire Direct - and remember, generally, you can't borrow money cheaper than on mortgage!

3. To improve Property

If you love your house, the area where you live and your friends - but you need a bit more room, then moving house might not be the best idea. A remortgage however could provide the additional funds you need to give your home a facelift, maybe another room, conservatory, or perhaps even a new fitted kitchen or replacement windows.

So, if you have more children than bedrooms, a remortgage to extend your property could be the solution, without having the upheaval and expense of buying a new property.

4. To guarantee repayment of the mortgage at the end of the mortgage term by switching to a Capital Repayment basis

Lots of people still have endowment mortgages that aren't performing as well as originally planned. Most people want the guarantee of repaying the mortgage at the end of the term, so it may be prudent to consider switching to a capital repayment mortgage, and at the same time taking advantage of a different mortgage product, such as a fixed or discount rate, or maybe a mortgage product where a Cashback of up to 10% is payable!

So these are all possible remortgage advantages, but like many things in life, there are potential drawbacks too, which we'll explore next.

Potential remortgage disadvantages

Whilst there are clearly some really positive and beneficial aspects to remortgaging, there are also potential remortgage disadvantages too!

It is also important that you carefully take into account the potential disadvantages of consolidating outstanding credit by a remortgage, and these include:

The interest charges are likely to be greater
Although borrowing money against the security of your home will usually be at a cheaper rate of interest than those levied on credit and store cards, HP and personal loans; by extending the term of your borrowing on the remortgage, it is likely that over the longer period of time that you take to repay the new transaction, inevitably you are likely to repay more in interest charged than you would have done if you had paid your borrowings over the initial contractual term.
You may incur Early Repayment Charges (ERC's) and other costs
There's a possibility you may incur an Early Repayment Charge (ERC) if you settle your existing mortgage during a lock-in (or tie-in) period. Other costs that you may have to pay could possibly include solicitor's fees, valuation and broker costs, although such costs can often be mitigated when set-off against the savings on the new mortgage.
Your home is at risk if you fail to keep up your repayments
Because you are using your home as security for your remortgage, you will be converting the consolidated debt from unsecured borrowing to secured borrowing. This means that in the event you are unable to make your repayments, your home could be repossessed as a result.

What if I were to borrow more money from my existing lender, is that a remortgage also?

Borrowing an additional amount from your existing lender is usually known as a Further Advance. There are certain benefits of arranging a further advance as opposed to arranging a complete remortgage, such as:

No Early Repayment Charges to pay
Legal work is usually cheaper.
You know them, and they know you!

However, there are likely to be one or more of the following disadvantages to arranging a further advance from your existing lender:

A valuation fee will still usually be payable
You will normally incur some legal charges
It's unlikely that you will be offered a preferential rate, as they are generally reserved "for new customers only"!
You may have a poor track-record with your existing lender!

Would a remortgage be useful to me?

So you might be asking yourself 'Hmmm, but would a remortgage be useful to me?'.

Well, let's look at it this way, if...

you've got more children than bedrooms,
you want to extend your property
you want to carry out home improvements and potentially improve the value of your home
you need to reduce your monthly outgoings
you need to raise cash for any purpose
you wish to improve your mortgage rate
you'd like to fix your mortgage payments
or if you'd simply like to get rid of the nagging bank manager, and make a fresh start!

then you may well want to consider the possibility of a remortgage, so why not give us a call!

Contact Shire Direct for a great remortgage deal to suit you!

So, if you feel a remortgage might be a good idea for you why not Contact Us?! We can usually help even if you've experienced credit problems such as CCJs, Arrears, Defaults, IVAs or have been discharged from bankruptcy.

A chat with one of our professionally qualified mortgage advisors will soon put you in the picture, so call us today on Freephone 08000 282 281 (lines open 8am - 10pm everyday, including weekends!). Alternatively why not enquire online at any time, it's simple to do and takes virtually no time. In either instance, we'll carefully assess your circumstances, needs and aspirations in a bid to come up with just the right solution for you!

We're confident that you will find our approach to be friendly, professional, helpful and free of that air of stuffiness that is all too commonly found elsewhere! Why not read some of the comments our previous customers have made in recent times. So get in touch today, we'd love to hear from you!

Well that wraps up our glossary article 'Remortgages Explained', we hope you've found it to be useful! For further reading why not explore the rest of our Mortgage Glossary, there are over 200 different pages (and counting!) jam-packed with useful help and information! Don't forget if you feel we can be of help we're just a free phone call or couple of mouse clicks away and we'd love to hear from you!

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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