Remortgage

The term remortgage is also often referred to as refinancing. Essentially when someone remortgages their property it means that they have entered into an agreement with a lender whereby they are paying off an existing mortgage on a property with a new mortgage. Basically remortgaging will generally be undertaken if the borrower’s initial deal has expired or if there is a better deal available, say from another lender, which could save the homeowner hundreds or even thousands of pounds per year when compared to their existing mortgage deal.

However, for those considering remortgaging before their current deal expires, it is important to make sure that any costs incurred by the early transfer of the mortgage are worth it. These costs inevitably come in the form of early redemption fees and, generally speaking, form a very small percentage of the overall mortgage originally taken out. For example, for a homeowner taking out a three year fixed mortgage a typical redemption rate might be 3% of the total loan in year one, 2% in year two and 1% in year three. If these costs are not properly taken into account they could easily negate the financial benefits of remortgaging and nullify any potential gains. When arranging a remortgage there is also the arrangement fee to take into account, as well as any potential surveying and solicitor fees. So, all in all, for people considering remortgaging it is vital that all potential fees and added ‘extras’ are weighed up carefully before any deal is entered into. The actual costs incurred in remortgaging could result in borrowers facing the equivalent of several months’ mortgage payments thus wiping out the potential benefits of remortgaging. However, on the flip side, often, remortgaging works to save the homeowner a great deal in future monthly payment as well as providing an opportunity to release some capital if required.

So.... remortgaging can be a minefield for borrowers who do not take all costs and interest rate movements fully into account. For many this can result in them being unsure about how to work out exactly which remortgage deal will provide the best value for the future. This is where an independent mortgage adviser can really prove their worth by identifying the most competitive deal currently available for a variety of individual circumstances. Of course finding such an important person to aid your financial well-being can be tough but fortunately cherryFind’s free service is specifically designed to help you find a professional, ethical, impartial / independent financial adviser who can help you to achieve your aims. All listed advisers have made the cherry Promise and have committed to give you caring and truly impartial advice.

With interest rates at historically low levels and personal circumstances inevitably changing as the recession bites, there can be great merit in homeowners reviewing their current mortgages and contemplating the financial benefits of a number of available remortgage deals. Recent monthly figures show that mortgage approvals are rising and that the housing market is slowly showing positive signs of some recovery. With this in mind there is an increasing amount of interest in what the Bank of England Monetary Policy Committee will decide to do regarding interest rates in the latter part of 2009. Earlier indications pointed to a small rise in the rate towards the end of 2009 but many economists are now suggesting that the current rate of 0.5% will remain constant until early 2010 at the earliest.

For those borrowers looking to remortgage as their current deal comes to an end, or indeed if they are just in search of a better available deal, the dilemma of deciding between a fixed rate or a tracker is evident. The interest rate has a large bearing on this choice and it remains a tricky one to fathom. In today’s fluctuating economic conditions it can be tough to know exactly what is around the corner in terms of interest rate movement. What is clear is that the actual number of mortgage deals available have fallen greatly thanks to lender appetite to risk diminishing as a result of well-publicised funding issues hitting lending institutions of all sizes. Although, even though the market has shrunk, there are still some good remortgage deals available. Due to low interest rates the number of tracker products has also been significantly reduced but of the ones that are available, many are more competitively priced than the leading fixed rate deals.

However, a tracker won’t suit all those looking to remortgage. The rate borrowers pay is directly linked to the base rate, so payments will go up or down with interest rate changes. Those with existing tracker mortgages obviously benefited when interest rates were slashed between October last year and March 2009. But those remortgaging will have to take greater care if choosing this particular product as the next move in interest rate will inevitably be upwards. For those looking to remortgage onto a longer deal it may be currently worth considering a lifetime tracker. These deals are inclined to have more flexibility and tend to be penalty free so that borrowers can jump out and remortgage onto another product at any time without incurring an early redemption charge.

Fixed mortgages remain the most popular option for those looking to remortgage as they ensure that monthly payment won’t be affected by interest rate changes during the term of the mortgage. This provides security for those wishing to know exactly how much their repayments will be and allows them to budget for this accordingly. This may come at a slight premium but for many this is certainty well worth it. Indeed, according to recent research from Paragon Mortgages, a panel survey of mortgage brokers found that 70% of cases submitted by mortgage brokers in the three months to the end of June were for fixed rate deals. This is the highest level since the survey was launched in 1996 and up from 55% in the first quarter of the year and 41% in the final quarter of 2008.

The mortgage market remains a complex area and one, despite lower product numbers, that still requires thorough research and expertise to get the best available deal to fit individual circumstances. So, if you are thinking of remortgaging there is great merit in consulting an independent mortgage adviser as they really could be worth their weight in remortgage gold.