All about remortgaging

Remortgaging your home can be a great way to raise money when you lack the cash for a significant outlay. However, you should make sure you use a mortgage calculator to secure the best deal possible, helping you to keep your monthly repayments down.

When you obtain a second home loan, you renegotiate the terms of your current mortgage so you can obtain a better deal, or completely switch to a different bank or building society. You may also decide to extend the duration of your mortgage so that additional funds can be raised.

Being able to remortgage your property is not a given and there are several things your lender will take into account. First and foremost, they are likely to look at your repayment history and see if you have missed any monthly outgoings. Secondly, they will reassess your income in case it has risen or fallen.

All of these factors will help them to decide if you are a candidate for remortgaging and what the best rate available to you is.

The provider may also look at your reason for remortgaging. A lot of people take out a second home loan so they can consolidate their debts. However, this needs to be carefully considered as you would simply be clearing one lot of debt with another type of one. Seeking financial assistance could help you make an informed choice.

Another popular reason for remortgaging a home is to raise the funds required for a significant improvement project, such as adding an extra bedroom in the loft, fitting a more modern kitchen or boosting the property's size via an extension.

Extending your home, rather than selling up and struggling to take another step up the housing ladder, can be a good option if you want to avoid the hassle of trying to find a buyer and a new house, especially in the current economic environment.

It should not be forgotten that remortgaging can be carried out if you want a better deal so your monthly repayments are lower. So long as you have taken into account any costs you might incur, this could be a good way to boost your disposable income.

Of course, there are disadvantages to be aware of when choosing to remortgage.

If you do decide to switch to a better deal before it comes to a natural end, your lender might levy early redemption charges. Any cashback it previously gave to you may have to be returned. As such, waiting for your current deal to finish before switching can be a cost-effective move to make.

Using a second home loan to clear debt also comes with its pitfalls, especially as you are taking out even more debt to try and improve your financial situation. Juggling two lots of monthly repayments can be tricky and should you find your circumstances suddenly change, you may fall behind and risk losing your home.

Like any financial product, there are also advantages that can be enjoyed. In the case of using the cash raised for a home improvement project, this will mean you will only have to contend with one monthly repayment. If you had decided to take out an unsecured loan to cover the work, this may have impacted upon your budgeting abilities.

Making a home bigger tends to always be a good thing in terms of the value of your asset, so using a mortgage for this reason could pay dividends further down the line and prevent you needing to move so soon.

Switching deals can help you enjoy more disposable income to play with if you secure a new mortgage with a much lower rate, lowering your monthly repayments.

Loved ones can also benefit from the cash that can be freed through remortgaging. Should you have a child or grandchild who would like to go to university, but at present they cannot afford to, releasing cash through a second home loan can help them realise their dream.

Once you have weighed up the pros and cons of remortgaging and have made a decision to secure a second home loan, make sure you compare the rates of different products to help keep the costs involved as low as they can be.

Mortgage rates 

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2011-11-18 11:40:44 © Moneyextra.com