Mortgage or remortgage? Whats the difference?
The steps involved in finding and setting up a mortgage or remortgage are similar, but they are not quite the same. In this article we look and the main difference between mortgages and remortgages.
Put simply, a mortgage is the loan you take out when buying a new home, while a remortgage is when you get a new mortgage to pay off your existing mortgage while keeping your existing home.
In general, the remortgage process will be easier than getting a mortgage because the lender will see that you own a home and, most likely, have kept up with repayments over the years. That said, you will still need to provide proof of income and other documents when applying for a mortgage.
Getting a remortgage is also less stressful as you are only dealing with the application for a new loan. When applying for a mortgage you will most likely have the added stress of searching for and closing the deal on your new home.
Many mortgage and remortgage lenders recommend that you have agreement in principle for you mortgage before you start to make offers on properties. The main advantage of this is that the property agent will be more likely to accept the bid. Also, house sellers are much more likely to accept a bid backed by a mortgage that is agreed in principle as it increases the chance of a smooth sale without any hiccups. It also gives you the peace of mind of knowing exactly what you can afford so that you can go ahead and bid on properties with confidence.
In general, mortgage and remortgage products are very similar. Most lenders offer a choice of fixed rate mortgages and remortgages, variable interest rate mortgages and remortgages, tracker mortgages and remortgages, and capped rate mortgages and remortgages.
When you set about choosing a mortgage, bear in mind that you may well want to remortgage a few years down the line. Because of this, try to choose a flexible mortgage that does not penalise you heavily with redemption fees and exit fees if you decide to remortgage.
There are a number of reasons why people choose to remortgage. The most common one is to save money on their monthly repayments. Borrowers whose mortgages have reverted to their lenders variable interest rate often find that they can save up to 100 a month by remortgaging. Remortgages are also useful for releasing equity in your home or consolidating your debts.
When you begin looking for a mortgage or remortage you will find that there are hundreds of products on offer from the various lenders. Comparing all of these can take time and effort, so many people seek the help and advice of a mortgage or remortgage broker. These can help find you the best deal and assist with the application process.
There is plenty off choice out there if you are looking for a mortgage. Remortgage products also offer excellent choice in the UK today. A very popular choice is fixed rate remortgages and mortgages. 10 year fixed rate terms are usually the maximum you can get but will provide security and peace of mind.
