What is Remortgaging?

Remortgaging Guide:  #1

What is Remortgaging?

Remortgaging is the process of paying off one mortgage with the proceeds of a new mortgage, using the same property as security. Often the purpose of switching is to secure a more favourable interest rate from a different lender.

Home-owners often misuse the expression remortgage when they are simply switching from one product to another with the same lender. Remortgaging means shifting your mortgage from one lender to another to get yourself a better deal. There are many reasons why a remortgage makes sense but the main reason is to save money. For most people, their mortgage is their biggest financial commitment. Streamlining the largest debt can produce the largest saving.

Remortgaging does not usually involve moving home or taking out a second mortgage on the property, it is in effect the transfer of a mortgage from one lender to another.

Home-owners may choose to remortgage for various reasons, usually to reduce the overall monthly mortgage payment amounts. However other reasons may include reducing the size of repayments, paying off a mortgage earlier, raising capital or consolidation of other more expensive short term debts.

A home purchase is probably the biggest investment an individual will ever make and therefore finding a way to save money on the investment will make a significant difference in the monthly budget. The ability to remortgage is very much based on an individuals circumstances and, as the costs involved can be very large, it is always worth taking advice from a suitably qualified individual.

Before contacting a lender or broker it makes sense to find out what remortgaging options and products are available and how the remortgage process works.  

Next - #2  Reasons to consider a remortgage