Remortgage And Save – Getting The Best Deal

Looking for a better mortgage rate?  Then why not think about remortgaging?  Remortgaging means taking out a new loan to replace an existing mortgage, which can be attractive for a number of reasons.  Some people will need to do so as the attractive mortgage rate they have is expiring.

Others may wish to release equity from their home by borrowing additional monies, perhaps in order to repay other debts with a higher interest rate, or to spend on improvements to the home.  Perhaps borrowers have had a pay rise, or alternatively someone in the household has lost their job, and needs to reduce outgoings.  You do not need to move house to remortgage, so it can be a good way to save money, or get a lump sum at a favourable interest rate.

Generally, one of the benefits of remortgaging is to obtain a more favourable interest rate, which obviously reduces the repayment burden each month, which is something many households are grateful for in this economic climate.  Of course, to fully benefit from this, borrowers need to do their homework and investigate the wide range of deals available to them.

The remortgage market can be a complex one, and it is helpful to get some external advice when making major financial decisions.  There are other costs to think about when remortgaging;  you may need to pay an exit fee to the existing lender, for example, plus a new mortgage arrangement fee, valuation fees, and possibly early redemption fees, so it is helpful to have someone walk you through the multitude of options.

The first step when looking for good remortgage rates is to approach the existing lender.  They benefit from the interest being paid on the loan right now, and they might be prepared to improve the deal if the alternative is losing the business.  The credit crunch has made lenders more picky about the business they do though, so do not be disheartened if they refuse.

For example, there are few remortgage deals out there right now for those who want to borrow more than 75% of their homes value, so if that is you, it might be harder to improve your current deal.  The market is slowly improving though; according to the Council of Mortgage Lenders, remortgage approvals in February 2011 were the highest for more than two years.

If the current lender fails to step up to the plate, look around at the wider market.  There are many types of remortgage available, so think about whether you need an interest only or repayment mortgage, for a start.

Most people prefer repayment mortgages because of the certainty that they will pay it off over the agreed time.  Then look at the various remortgage rates that will be open to you, ideally through an independent advisor, as the market is very fast moving and deals change from one day to the next!

Remember to look at the entire cost of remortgaging, not just the interest rate, as this can make the difference as to whether it is worth going through the process or not.  Finally, keep an eye on the market at regular intervals; deals change quickly, so the top deal you get today may be bottom of the pile in six months.


Howard writes for Just Remortgages one of the UK’s top sites for the latest remortgage rates and remortgage deals


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