subject: Remortgaging - tips [print this page] Remortgaging is a good way to escape high variable or fixed interest rates, and take advantage of some of the current fixed rate, tracker or discount mortgages, which have much lower rates.
It is also a way to raise funds for an expensive purchase. If you have owned your property for a few years, it could be worth much more than your outstanding debt. By taking out a new, larger mortgage, you can release money to spend as you choose.
Remortgaging may also appeal if you are on a variable rate and believe interest rates are about to rise. You can Move to a fixed-rate deal before this happens.
Below are some tips to help you with remortgaging:
Write to your existing lender and ask for a written redemption statement. This will indicate the exact outstanding balance of your loan and will show any penalties or fees to be changed for redeeming your mortgage.
Calculate what the legal fees involved will be. These will vary according to the value of the property and the solicitor used.
Look at the new mortgage offer, including the small print, and as for a written statement if what your new repayments will be, showing any discounts and all the costs that will be incurred, such as the HLC and any arrangement fees
Work out how much you will save each month by taking the repayment for the new loan away from the old repayment - don't forget to take the standard variable rate(SVR) that the new loan will revert to into consideration as well, particularly if the discounted tracker or fixed rate is only for a brief period of time.
To judge whether or not remortgaging is worthwhile, compare costs with the savings - But don't forget that the costs will be payable upfront while the savings will accure over a period of time.
