Can a remortgage help me avoid repossession?
What does remortgaging mean?
When you arrange a remortgage, you change your mortgage without having to move house. People often re-mortgage when there’s an attractive deal available with another lender that’ll save them money on repayments… very useful when you’re in difficulties. Some people even remortgage with their existing lender.
Remortgaging can help stop house repossession. It can also be a good way to raise extra money, as you can use it to release the equity in your home. As a general rule you can borrow anything from £25,000 up to £500,000, at an interest rate based on your individual circumstances.
A remortgage often includes stiff redemption penalties, so take these into account before you make a decision. Despite this, the benefits often outweigh the potential costs, especially when you are facing financial trouble. The experts recommend that you always seek independent advice.
You can easily find a suitable IFA online. Go to searchifa.co.uk or ifa-guide.co.uk.
A UK remortgage deal can give you:
• A better deal, with lower or discounted mortgage interest rates
• Up to 50% reduction on your mortgage repayments
• The option to repay over a longer period
• The chance to consolidate your existing loans into one lower monthly mortgage payment.
• The opportunity to pay off your existing mortgage, arrears and other debts.
• Access to the equity trapped in your home and no restrictions on how you spend it.
• A way to borrow more money while repaying less than your current mortgage.
Remortgages – the disadvantages
• Redemption penalties often apply if you switch your mortgage elsewhere. Always check, as penalties can vary enormously
• More fees… including things like legal and valuation fees, admin fees and arrangement fees. However some lenders will pay these costs as part of the deal
• You might lose your loyalty discount, which lenders often give as an incentive to keep you with them. These are usually discounts on the SVR, or standard variable rate
• Time… it can take a while to find the best mortgage deal but a good independent financial advisor will probably be able to speed the search up for you
• A remortgage will often have a longer repayment period. While this reduces your monthly repayments, it also means that you pay an enormous amount of interest in the long run
Remortgage suppliers include:
• Make sure that you talk with your bank manager first to see what they can offer.
• Your current mortgage broker, they often have access to new products on a daily basis and know the market far better than most bank mangers.
• A wide variety of online suppliers. Compare the market using price comparison websites such as moneysupermarket.com, moneysavingexpert.com, RemortgageExplorer.co.uk but read the small print and if in doubt ask a solicitor.
What new products have you found helpful when you remortgaged last? Let the community know below…