by : Daniel Spivey

Remortgage is also known as refinance. It is the process of settling one mortgage with the proceeds of a new mortgage by offering the same property as security. It is the process of transfer of the mortgage from one lender to another lender. This is may be done to get a better rate of interest. Other reasons for remortgage may be to reduce the length of repayments, raise additional capital etc. There are many lenders available in the market and is very competitive. Several online lenders are also available. To smoothen the process of switchover, many lenders offer free valuation and waiver of legal fees etc. Normally, the process takes one month to complete. While considering remortgage, the fee associated with remortgage such as legal fees, valuation fees, arrangement fees, solicitor fees, dead release fees, early redemption fees, mortgage indemnity guarantee etc. must be taken into account, as these will increase the cost of mortgage. Home-owners have to select the best remortgage quote taking into account the above fees. Some lenders may waive some of the above fees. However, persons with good credit will get lower interest rates compared to persons with bad credit. Some institutions charge early penalty fee for prior closure of remortgage. So it is always better to take a loan based on your financial position. It is very important to work out the redemption cost carefully, before switch over to remortgage. It may make sense to wait until the ERC period has passed before switch over. However, be careful when selecting a new mortgage with a low interest rate, as the price you may have to pay in the future for the lender's initial generosity could be early redemption charges applied to the new loan. It may cost you next to nothing to change your mortgage if your current loan has no Early Redemption Charges.

In a fiercely competitive market, nearly every lender is keen to attract remortgage business. Most lenders compete to provide the best remortgage deals. They are prepared to offer a range of deep discounts, low fixed and competitive capped rates which match up to the deals they offer home buyers in order to attract mortgage customers. It is easy to believe that the grass is greener and switch to a new lender offering low rates and the promise of tip top customer service. Traditionally, remortgage were associated with debt consolidation - the re-organization of a messy state of financial affairs, rather than a sensible and proactive way to make more money. More and more people are still attracted to sorting their finances out and transferring debts with high rates of interest to a home loan, since a mortgage is the cheapest way to borrow as the monthly payments for your remortgage are less than the total outgoings paid on the separate debts. Remortgage are for longer period whereas loans are for short period, hence the repayments on remortgages considerably more than separate loans. These aspects must also be taken into consideration while applying remortgage.