The term remortgage is used to describe the situation when a mortgage's original terms are re-negotiated. Remortgaging typically means that the borrower is increasing how much they are borrowing, and this usually becomes a reality when the property has gained value during the period of the mortgage allowing for the terms of the mortgage to be altered in some way.
Borrowers often use a Remortgage as a way to repay other debts that they have accrued, such as credit card debts or personal loans, or they may choose to use the money they obtain from the remortgage in order to make much needed home improvements, such as the conversion of a loft or the addition of a conservatory.
There are many enticing reasons to seek a remortgage, including attempting to secure a better deal from your current mortgage lender, or even moving to a completely new lender in the case that they are offering a rate that is much more competitive.
The process of securing a remortgage is not necessarily an easy one, as it requires a fresh new survey of the properly, along with an updated valuation because the people who are handling your remortgage may need to take any change in value into account while processing the remortgage. If your home has increased in value due to a fluctuation in the property market either on a local or a national level, then it may be worthwhile to seek remortgage as a way to make use of the equity in your home. Additionally, if you have made improvements to your home which have increased its value since you secured the original mortgage, now may be the right time to take advantage of them by drawing money out of the equity in your home.
Mortgages are not a prison sentence, despite the fact that many people believe them to be. Lenders tend to be extremely flexible when it comes to offering mortgages and remortgage options, mostly because competition is becoming more intense. If you have taken care of your mortgage and feel that you deserve to have the terms reviewed, you may be able to renegotiate your original mortgage into something much more desirable. Does your existing mortgage rate have an excessive interest rate that you believe should be lower, or has a rival lender offered you a remortgage rate that you prefer? Are you looking for some extra cash, and want to draw equity out of your home in order to pay for an extension or improvement for your home or some other large purchase? Increasing your mortgage by way of remortgaging and drawing the cash out for personal use or refinancing into a smaller interest rate or more manageable monthly payments is definitely an option worth considering.
If you believe you would like to remortgage, just be intelligent about your options, because there are bad remortgage deals. Make sure that you can meet your repayment obligations before you increase the amount that you have to pay off as defaulting on repayments could result in you losing your home. Having said this, if you are intelligent about your remortgage, there is much that you can gain from it.
Sydney Bartlett is a freelance writer who writes for a number of UK finance related websites such as Loan Seeker . His recent work there includes articles about remortgage loans and UK lenders .
He regularly writes finance and loan related articles for the Loan Seeker website.