How to remortgage.

When your mortgage deal comes to an end, you may want to shop around for a new product. This is known as a remortgage.

Doing nothing and staying with your current lender after the end of the agreed term of your mortgage, say two or three years, will mean that you revert to the lenders Standard Variable Rate (SVR). If this rate is relatively attractive, you may not want to bother remortgaging but with interest rates at an all time low (0.5% - Mar 09), there are some factors to consider.

if you have not built up much equity in your property, you may not be able to remortgage, as many lenders now insist on a minimum of 20%. But if you have a lot of equity in your property, you may well be able to remortgage onto a more attractive interest rate.

Reasons for Remortgaging:

    Get a better rate (especially if your initial deal period is over and you are about to revert to an uncompetitive standard variable rate), to consolidate debt or to release equity. You may also have to remortgage if you want to move house. In such a situation, even if your lender will allow you to transfer your homeloan in theory, it will probably require a valuation of the property to ensure it meets its standards.

    Remortgaging needn't only occur when your mortgage term comes to an end. Some people take out a new mortgage simply to save money on their monthly repayments. For example, you may take out a fixed rate mortgage only for interest rates to plummet, leaving you stranded on a higher rate. Remortgaging to a more competitive rate in these circumstances may make financial sense. Bear in mind that remortgaging is not a cost-free process though. Your current mortgage may carry penalties or charges if you try to leave it early, plus there will probably be costs associated with the new deal, so factor all of this into your decision.

    In the past, remortgages were popular as homeowners sought to withdraw equity from their properties to fund the likes of home improvements or holidays. In the current economic climate with slowing house prices and higher interest rates, this is not such a common occurrence and a remortgage should really be driven by need rather than luxury.

If you are staying with your existing lender, then remortgaging should be relatively straightforward. Your lender will probably contact you before your mortgage term expires to talk through your options. If not, you can get in touch with them.

If you feel a bit overwhelmed by the choice, then you may like to enlist the help of a mortgage broker like Crystal Clear Home Loans. Not only will we be more adept at finding the right mortgage for you, they also have access to products that aren't available direct to on the high street. We are regulated by the Financial Services Authority, meaning we abide by a code to treat customers fairly. We have to find the deal that is right for each borrower and cannot just recommend products that may be lucrative for us.
 
 






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