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Remortgaging is basically the process of replacing an existing mortgage on a property with another mortgage. The remortgage may be for the same amount as the original mortgage, but may also be for a different amount. Some people will use a remortgage to raise the necessary funds to complete home improvements. It is very common now for mortgage products to be designed to have more favourable terms at the outset, with less favourable terms kicking in later. Mortgage companies use these more favourable terms to attract new borrowers. The downside is that as a mortgage gets older it is fairly likely to become less competitive, hence the need for most people to consider remortgaging at regular intervals.
With so many people remortgaging on a regular basis you would think that the process would be very straightforward. Well the good news is that once you have chosen your new mortgage, most of the work is handled by the new mortgage company or the conveyancers appointed to act on their behalf. However the actual task of selecting the new mortgage in the first place is getting more complicated.
Recent changes in the way mortgage companies position their offers mean that consumers need to carefully consider all aspects of new remortgage deals before they decide to switch. Previously a borrower would almost always lose out if they let their special rate mortgage revert to the lender's standard variable rate. But fees and charges for new remortgages mean that all aspects of a new deal should be totted up to ensure a change is worth the effort.
The main reason for the difficulty in making a remortgage decision is that the mortgage companies are dreaming up ever more complicated products. It's no longer a case of just comparing interest rates, there is often a mix of various fees muddying the waters. If you think you may not be up to evaluating all this information yourself, it would pay to take professional advice or work through a recognised mortgage broker.
The Council of Mortgage Lenders pumps out regular monthly information on the state of the UK mortgage industry and recently they have been reporting lower levels of remortgages. This effectively means that people are sticking with their mortgage deals for longer than before. The cause is probably lower savings to be made by going through the process of remortgaging, which now attracts a variety of administration changes, some of which can be over £1000 on larger loans.
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