Refinance Mortgage Loans - Articles & Advice

Save Money with a Remortgage

Low interest rates, coupled with increased competition in the UK mortgage market over recent years means that there has never been a better time to review your existing mortgage arrangements.

To put it simply, there is a good chance you could save money by remortgaging.

What is a remortgage?

Remortgaging means switching to a different mortgage deal. This could be with your existing mortgage lender, but more often than not it will be with a different bank or building society.

In times gone by, many people never bothered to remortgage, but it looks like that situation has begun to change in the past couple of years.

According to the Council of Mortgage Lenders, in January 2003 (for the first time ever) remortgages accounted for more than 50% of the total monies advanced by mortgage lenders.

Save money

One of the most common reasons for remortgaging is to reduce costs. By switching to a lower interest rate you can either benefit from lower monthly repayments, or keep the monthly repayments the same, thus repaying the loan quicker and reducing the overall term of the mortgage.

Raising equity

Another reason to remortgage is in order to raise additional cash.

Due to the rapid rise in UK property values over the past few years, many people now have mortgages which are well below their home's current value. The difference between the property value and the mortgage debt is known as equity. The majority of mortgage lenders will allow you to increase the size of the mortgage in order to tap into some of this equity. The cash
raised can be used for a variety of purposes, such as home improvements, holidays, a new car, or the consolidation of existing debts.

In the current market, it is not uncommon for someone to be able to raise an additional £20,000 against their property and still save money on their monthly repayments.

No move, no hassle

Unlike moving house, arranging a remortgage can be surprisingly hassle-free. There are no chains of buyers to worry about, so the whole process can often be completed in a few weeks.

Counting the costs

In terms of costs there is no stamp duty to be paid, as you are not purchasing a property. Many lenders will pay some or all of your valuation and legal fees.

In some cases there may be an arrangement fee or booking fee from the new lender. There may also be redemption penalties on your existing mortgage and you will need to take these into account when assessing how much money you could save by remortgaging.

Your mortgage is probably your biggest single financial commitment, so it makes sense to spend some time ensuring
you always have the best possible deal.

A free no-obligation assessment of whether remortgaging is right for you, can be obtained via various websites, such as the UK Mortgages & Remortgages website.

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Copyright 2004 David Miles. You are welcome to reproduce this article on your website, so long as it is published "as is" (unedited) and with the author's bio paragraph (resource box) and copyright information included. In addition, all links to external websites must be left in place.

David Miles edits a number of finance websites, including TheCashClinic.com - a UK Personal Finance Portal.

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