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 Now this right is easily exercisable, apart from a few loan providers who will continue to include these outdated clauses in their mortgage contract.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

There are numerous benefits to be had from a remortgage. In a nutshell, the key reasons for remortgaging are:Find a better mortgage deal – Many people choose to ‘shop around’ at the end of their discount, fixed or capped mortgage period, in an effort to find a better deal and save money on mortgage interest.

Debt Consolidation – One of the biggest incentives for a remortgage is to consolidate your debt into one loan. If a mortgage is used, this can usually provide the lowest available interest rates for your debt.Changing status from employed to self employed or vice versa – This can have an impact on your mortgage costs, as a regular employee income is liked by lenders, while self-employed individuals can benefit from a wide range of mortgages including self-certification mortgages.

Equity Release – Many individuals will choose to remortgage to raise funds for other commitments and investments, such as home improvements, a second home, buy-to-let, property abroad or to fund business expansion.

At Fiscus Finance, our commitment is to try and offer consumers informed choice.

If you feel that you are not making the most of your current mortgage deal, then the best time to arrange a remortgage is usually going to be as soon as possible. However there are certain situations where it may pay to wait a couple of months, and there are also certain times of year which are better for remortgaging than others.

As soon as any tie-in period ends - An obvious place to start would be to plan to start looking for remortgage deals around one month before the end of any tie-in. Active remortgagers that “shop around” can make tremendous savings on their existing mortgage.Three months after a pay rise - This is a good time to demonstrate to your bank that you have a sustainable higher level of income. From an overall personal finance point of view, this is also a good time to review your outgoings before you become too comfortable with the extra income.

A key consideration to make with any pay rise is that with modern pressures to spend, it can be very easy for pay rises to be rapidly absorbed into your existing monthly outgoings. Taking a look at your finances three months after a pay rise is a good opportunity to look through your bank and credit card statements, to see if any bad spending habits have cropped up.

Reaching the end of a loan repayment - This is always a good time to reassess your finances, as a major monthly expense has been taken out of the equation. As with receiving a pay rise, it is also extremely important to make sure that your reduced monthly commitment is not counterbalanced by immediately taking on additional spending burdens. It is particularly easy to negate the advantages of a completed loan repayment, when the amount you were repaying each month was £100 or less. One option to consider is finding a mortgage deal where you can repay an extra £100 each month, thus ensuring you pay off your mortgage quicker.

As a New Year's resolution in January - The New Year can be a good time to remortgage, if it is part of a genuine financial New Year's resolution which you have a realistic chance of sticking to. The danger of a remortgage in January is that it can be used to soak up excess Christmas spending. If the Christmas period has been particularly excessive, it is usually financially prudent to make some cutbacks in the New Year.

A remortgage package which consolidates your existing debts into one monthly payment, may lead to additional spending, as your monthly loan repayments are drastically reduced. Therefore, if you are remortgaging at this time, make sure that you have a system in place to curb additional spending.In the middle of summer - This can be a good time to remortgage, simply because this is a quite time of year for brokers, so mortgage agents are particularly keen to attract your business and thus offer some tempting rates. They will also have more time to hunt down the best possible mortgage deal for you.

In the middle of February - If you are looking to release a lump-sum for investment. A remortgage typically takes around 4 weeks to arrange, so making an application in February should enable funds to be released in time for the 6th April ISA deadline.

When you are considering buying a new car - A secured loan will protect the lender by holding the vehicle as cover. If financed through a remortgage, your home would be at risk if you fail to make repayments. Moreover, funds from your house should be used to continue to build equity. By investing in a car, you are purchasing a depreciating asset which in turn has the opposite effect – it lowers your overall level of equity.

In early November just before the Christmas rush - Remortgaging to release lots of cash just before Christmas leads to the very tempting option to spend, spend, spend over the festive period. Ideally, monies from a remortgage should be sensibly spent.Shortly before booking a holiday - It can be very easy to spend money while overseas, as using foreign currency can distort your spending patterns.

Even if you think that your current mortgage deal offers very attractive terms, it is worth reviewing this at least once every year in order to make sure that you continue to get the best possible rate. Our Mortage Rate Beater Dealer allows you to assess how much you could save by switching your existing mortgage to a better deal, highlighting the mortgages that offer better value and the amount you would save. In addition to this, our remortgage tables are updated daily and provide an accurate gauge of the best remortgage deals currently available on the market.

A Tracker Re-mortgage is a relatively new form of re-mortgage offer. These mortgages were basically introduced in order to help pass on the movements within the base rate of the Bank of England (specifically downward movements) a lot more quickly to the mortgage borrowers. From time to time, mortgage lenders will react very slowly to the changes of the Base Rate or they may not even respond at all if the alteration is merely very small.The Tracker Re-mortgage has an interest rate which is set slightly higher than the Base Rate, though it is normally just under the mortgage lender’s Standard Variable Rate (SVR).

At the time when the Bank of England’s Base Rate is increased or decreased, the tracker rate re-mortgage will move as a result and the borrowers monthly payments on their mortgage will either increase or decrease, even if their mortgage lender does not alter their SVR.The benefits of these Tracker Re-mortgages are that they are considerably cheaper than the standard variable rate re-mortgage, which means that the borrower will of course benefit from each downward development of the Base Rate, even if their lender does not reduce their own SVR.

When you are looking to re-mortgage it might save you time and money to go through a re-mortgage advisor. Re-mortgage advisors are trained staff who are able to offer you advice and assistance in order for you to find the best re-mortgage for you.

If your current mortgage deal has come to an end, you can arrange to switch lenders through a re-mortgage advisor who will be able to find you a new deal that is right for you. Or, you can re-mortgage to raise extra funds to enable you to complete and extension on your home or maybe even buy a new car.

If you are going through the re-mortgage process, you will already have had prior experience of the mortgage procedures. This can be a confusing time and when re-mortgaging it can sometimes pay off to go through an expert for advice.

A re-mortgage advisor will not only be able to offer you independent mortgage advice, they will also be able to arrange the re-mortgage for you. This saves you time as you won’t have to shop around for a deal that you think is good and discover that you made the wrong choice.When considering re-mortgaging, your next step should be to think about whether you need to raise extra capital by releasing more equity in your property. This can be done by re-mortgaging for a larger amount than the existing balance of your mortgage. Your existing property will need to be valued by your new lender to assess its value. The lender will then be able to assess how much they are willing to loan to you in comparison to how much you are able to afford to repay on a monthly basis.

When you are looking to re-mortgage, you should consider contacting a re-mortgage specialist who will be able to save you time and money. Re-mortgage specialists are fully trained in the re-mortgage market and as such will be able to offer you advice and assistance in order for you to find the best re-mortgage product for you. If you are looking to switch mortgages as your current mortgage deal has come to an end, a re-mortgage specialist can take the hassle out of this by arranging it for you, they will able to research your requirements and find you a new deal that is right for you.

Alternatively, you can use the re-mortgage process to raise extra funds to enable you to fund a variety of plans such as completing an extension on your home or maybe even buying a new car.If you are going through the re-mortgage process, you will already have had prior experience of the mortgage procedures. As you will be aware, mortgage decisions can sometimes be confusing to an unprofessional. Therefore, using a re-mortgage specialist can sometimes be useful when looking for expert advice in this field.

A re-mortgage specialist will not only be able to offer you independent mortgage advice, they will also be able to arrange the re-mortgage for you. This saves you time as you won’t have to shop around for a deal that you think is good and discover that you made the wrong choice.

A Cashback remortgage is a mortgage which comes with a lump sum of money paid up front by the mortgage lender as an enticement, which is included on top of the mortgage loan. A cashback mortgage is therefore, able to be used by a borrower in order to help them consolidate their debts, buy initial home furnishings or simply to cover any other costs which may be necessary. Because of the unfavourable terms of numerous other forms of debts, a cashback mortgage can prove to be a viable method of decreasing the monthly outgoings of other debts.

Though, it is very important to carry out both a personal research and get an independent external advice if required prior to making any major debt consolidation or mortgage arrangement. Cashback mortgages may be useful for getting capital in a few cases, but they are not for everyone.
These re-mortgages are not really a re-mortgage in themselves, yet a special offer which is associated with particular forms of re-mortgages.

Getting a better rate - This is the obvious advantage of remortgaging, especially if it has been a few years since you last reviewed your mortgage. You should almost certainly be able to move to a more attractive rate compared to the one you are presently on. Make sure that you tell your existing lender that you are considering remortgaging, so that they can have the opportunity to come up with a competitive offer to keep your business. If you want to get a better idea of remortgage interest rates, we suggest you take a look at our remortgages tables.

Taking advantage of an improved credit score - This is more applicable if you have had credit problems in the past, or if you are a first-time buyer. Providing you have had a year of making your monthly mortgage payments on time, then you may now be viewed by financial institutions as a much better credit risk than you were before you moved.This is particularly important for first-time buyers who have moved away from their parents’ home, as the financial responsibilities of home ownership are much more substantial compared to living with parents. Although it takes six years for the complete removal of any CCJ or other serious credit problems, as each year passes, you are more likely to move away from being penalised by banks that see you as a high credit risk.

Debt consolidation - This is perhaps the most popular reason for remortgaging. If you continue to pay out different amounts on your loans, credit cards and overdraft repayments, these are virtually always going to be at a higher interest rate than your mortgage. Even if you are able to take advantage of special offers, such as 0% interest credit card balance transfers, these tend to only provide short-term solutions. Consolidation therefore has the double advantage of reducing your monthly loan repayments and reducing the interest rate you pay.Many debt-consolidation schemes come across as very attractive, helping borrowers to reduce monthly outgoings and maintain credit ratings if repayments are made on time, they can have their drawbacks.

Firstly, as it is secured against property, your home is at risk if you do not keep up repayments. Secondly, although the interest rate falls, the repayment period increases and this means that overall interest may remain the same or possibly even increase. When it comes to debt consolidation, you must not expect a remortgage to solve all your problems; you must address the underlying issues that led to the accrual of the debt in the first place, in particular your outgoings.

Changing the type of interest paid - If you are concerned about the potential for a rise in interest rates, you may prefer to remortgage to a deal which offers a capped or a fixed-rate product. You may also find that a mortgage which allows you to make additional payments or to take repayment holidays offers useful advantages. These are known as flexible mortgages.Staying financially focused - For most people, their house is by far their largest asset and mortgage repayments are usually the largest outgoing after income tax. Staying on top of changes in interest rates and different mortgage packages which are available can enable you to stay focused on your most important financial commitments. This can then give the opportunity to make sure that you have the best deals on other areas as well. Once you have looked at your mortgage package, you might want to consider other financial factors, such as credit card interest, investments and pension payments.

Paying off your mortgage sooner - A remortgage deal may allow you to pay off your mortgage earlier by keeping your repayments the same but reducing your interest rate. Alternatively, you may be able to move to a flexible mortgage deal which allows you to make lump-sum payments or make larger monthly repayments, thus bringing forward the repayment of your mortgage balance.

Paying fees and charges - The most obvious (and probably largest) fee will be the redemption penalty charged by your existing lender should you decide to switch your mortgage to another provider. You should always check to find out how large a penalty this will be, as it can vary greatly between mortgage lenders and products.Other fees involved may include (but not be limited to) property valuation fees, legal fees, administration and arrangement fees and any other “unusual items”. This is certainly something to think about before a remortgage, but remember that many lenders will offer to pay many and possibly all of these fees if you switch to them.

Potential loss of loyalty discounts - Some lenders, realising that borrowers remortgage after introductory periods to save money, now offer interest rate discounts as a way of retaining homeowners in the longer term. These are usually discounts on the Standard Variable Rate(SVR), such as National Counties Building Society’s 0.9% discount after three years. Some lenders have specialised teams within call-centres that will offer last-ditch deals to customers that threaten to remortgage with another provider, and many of these deals will not be advertised or be offered in branches.However, many of these loyalty discounts can be poor value. In fact, some competitors’ these discounted rates can often be matched by the SVRs of low-cost competitors such as Egg and First Direct. The best option is usually to speak to an Independent Financial Adviser (IFA) that can find the best available deal on the market, taking into account your current circumstances. If you complete our short enquiry form, we can have an IFA contact you within 24 hours.

Time taken to arrange best deal - There is obviously the time involved in searching for the best mortgage deal. This can be greatly reduced by speaking to an IFA that can help you with your search. However, once the best mortgage for you is found, there can still be considerable delays while the various contracts are arranged. This can lead to a state of unease amongst remortgagers as they wait for all the changes to be carried out. This apprehension is understandable, after all, your mortgage is likely to be your largest financial commitment and you would obviously prefer it to be completed as soon as possible so you understand where you stand.

Temptation to spend “unearned” extra cash - This comes down to a combination of discipline and need. Sometimes there is a need to use money from your mortgage to pay for items that are not necessarily going to add to your equity. However, in many cases it is more likely to be a result of undisciplined spending. This does not necessarily mean the individual heads out to the local high-street on a reckless spending spree, but more likely ends up spending slightly larger sums of money over a time.This may happen through spending a little more on a night out than you normally would, buying yourself a few more clothes than usual or perhaps treating yourself to a gift such as electrical equipment like a new DVD player. The best way to control spending is to keep a note of all your purchases for a period of time (say, a month) and then look back at your spending.

Longer repayment period - The beauty of consolidating debt or remortgaging is the idea that you can save money through a lower interest rate. This is certainly true, but the period of your loan and therefore the length of time you will pay interest must also be considered.

Even if a switch in mortgage leads to a noticeably lower APR, if the remortgage leads to an increase in payment period of, say, 5 years, then the total interest paid on the mortgage can suddenly add up to a considerable sum. When remortgaging, it is imperative you bear this simple fact in mind: as well as rates, work out how much your total debt and interest obligations will be over the period of the mortgage.