Remortgaging a property involves replacing your current mortgage with a new one, using the same property as security. This process can help you secure a better mortgage rate, raise additional funds, or make changes to property ownership. Whether you’re looking to reduce monthly payments, release equity for home improvements, or add/remove someone from the mortgage, understanding the remortgage process is crucial.
This guide explores the key reasons for remortgaging, how it works, and what to expect during the process.
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Why Remortgage Your Property?
Securing a Better Mortgage Rate
Most mortgage deals last between two to five years, during which borrowers benefit from fixed, tracker, or discount rates. However, once this period ends, the mortgage typically reverts to the lender’s Standard Variable Rate (SVR), which is usually higher than the original rate. To avoid paying more in interest, borrowers often seek one of two options:
- Product Transfer: This involves switching to a new deal with the same lender, which can be a simpler process with fewer fees.
- Remortgaging with a New Lender: This allows borrowers to explore competitive rates from other lenders, potentially securing better terms.
Remortgaging to a lower interest rate can reduce monthly payments, making homeownership more affordable over time.
Raising Funds Through a Remortgage
If you need additional funds, remortgaging can help you access the equity in your home. Homeowners often use this option for home improvements, debt consolidation, or as a deposit for purchasing another property.
The amount you can borrow depends on your home’s value, existing mortgage balance, and lender criteria. There are two main ways to raise funds through remortgaging:
- Remortgaging with a Higher Loan Amount: This means borrowing more than your current mortgage balance and using the additional funds for a specific purpose.
- Further Advance: Instead of switching lenders, you can request extra funds from your current lender. This amount is added to your existing mortgage but may have different repayment terms.
Lenders will assess affordability, credit history, and the purpose of the funds before approving the remortgage application.
Transfer of Equity
A transfer of equity occurs when someone is added or removed from the property’s ownership. This is common in cases of divorce, separation, inheritance, or when buying out a co-owner.
Since a mortgage is linked to property ownership, lenders require the mortgage deed to be updated when making these changes. This process often involves legal and valuation checks, ensuring the person taking over the mortgage can afford the repayments.
How Does the Remortgage Process Work?
Remortgaging follows a similar process to taking out an initial mortgage. Once a lender confirms your eligibility, they will arrange a property valuation to assess its market value. After reviewing affordability and creditworthiness, they will issue a mortgage offer. Upon completion, the new lender repays your existing mortgage, and the new mortgage agreement takes effect.
The time required for remortgaging varies but typically takes four to eight weeks, depending on property valuation, legal processes, and lender requirements.
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Need Specialist Remortgage Advice?
If you’re considering remortgaging for better rates, raising funds, or transferring property ownership, it’s essential to explore the best options for your financial goals. At Contractor Mortgage Solutions, we specialize in helping contractors and self-employed professionals secure tailored remortgage deals. Whether you need expert advice on product transfers, further advances, or buy-to-let remortgages, our team is here to guide you through the process.
Get in touch with Contractor Mortgage Solutions today and let us help you secure the best remortgage deal for your needs!