Re-mortgages or refinancing is a right which a lender of previous years was afraid to offer their borrowers. In fact, the re-mortgage scheme was harshly prohibited by clauses such as an early repayment penalty. The reason was that by refinancing their mortgage, the borrowers were actually repaying their mortgage a lot quicker. Because of this, the lenders lost a huge sum of money in the form of interest.

Remortgaging is the process of recalculating the mortgage on your house, in order to get a deal which is better suited to your current financial circumstances.This may involve maintaining existing levels of debt and simply “shopping around” for a better deal on interest or mortgage type, or may involve removing some equity from your house to help fund other investments or purchases. We have put together the following information to help give you further information on remortgages:
Why Remortgage?
When should I remortgage?
Advantages of a Remortgage
Disadvantages of a Remortgage

Many people flinched at this early repayment penalty, though they continued to put into effect the right to refinance.Mortgage loan providers accepted that it would not be an easy task for them to continue binding their borrowers. Now this right is easily exercisable, apart from a few loan providers who will continue to include these outdated clauses in their mortgage contract.

This re-mortgage or refinance happens when a borrower approaches one of the mortgage lenders who have a good deal for repaying their existing mortgage loan. In exchange of this, the borrower will take up a new mortgage loan on fresh terms. This new mortgage might not essentially benefit the borrower with cash. Various people will use this re-mortgage choice for different reasons.Cash will result specifically when the borrower has re-mortgaged their home in order to draw extra cash. For this type of re-mortgage, the borrower asks the mortgage provider to draw up a new mortgage with the remaining unpaid value of their existing mortgage as well as a certain sum of cash. As this method enables access to cash at a really low rate of interest, a lot of people choose this option, especially those whom are short of cash.Other borrowers use this re-mortgage option as a debt consolidation plan. Instead of taking some of their new mortgage as cash, they will include their debts onto the existing mortgage. Their new mortgage lender will repay the debts along with their existing mortgage. By doing this, they will save a large sum of money in the terms of interest.

For those people who are not attracted by characteristics such as extra cash and debt consolidation, they will find the improvement in the rate of interest a good enough incentive for them to re-mortgage. Obtaining a new mortgage on these fresh terms means that there will be a new interest rate procedure. Mortgages that had been obtained a long time ago will find these present interest rates extremely cheap.

A re-mortgage will be looked at as a step to include the present rates of interest in their monthly repayments. By switching over to these new interest rates it can greatly reduce their monthly mortgage repayments.Mortgage refinancing or a re-mortgage must be illustrious from a second mortgage. Whilst there may be a change of mortgage lender as well as mortgage terms, a second mortgage basically requires an addition of an extra debt to the existing mortgage. The mortgage company will ask the existing mortgage company to either offer money or repay some of their debts. This amount will be included in their existing mortgage and will be repaid through an increased monthly instalment. Therefore, there will be no change of mortgage lender or terms in the case of a second mortgage.

A re-mortgage helps the borrower to take advantage of the rise of equity in their home. A mortgage provider will welcome this boost in equity by actually offering them a higher value of mortgage. These re-mortgages are also beneficial to those people who have enhanced their credit status since obtaining their existing mortgage.

A bad credit rating at the time of obtaining their mortgage will result in the mortgage being at a higher rate of interest. Now, with their improved credit status, the borrower is able to obtain a better term mortgage using another mortgage lender.However, these re-mortgages do come with some disadvantages. The most visible one is that the repayment term extends for another long term. The borrower will need to pay out a number of fees again such as legal fees, property valuation fees and administration and arrangement fees. There may also be an early repayment penalty charge from some lenders for the premature settlement of accounts.Because the current economic scene has implied towards a decrease in the base rate of the Bank of England from a 3.5 year high of 4.75%, 78% of property investors are actually considering refinancing their mortgage loans. This is the best time for a borrower to apply for a re-mortgage because the interest rates are so competitive