what is remortgage

A remortgage is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. It is also known as refinancing in the United States. The process of remortgaging does not usually involve moving house or taking out a second mortgage on the property; it is, in effect, the transfer of a mortgage from one lender to another. Homeowners may choose to remortgage for various reasons, including to reduce the overall monthly mortgage payment amounts, to reduce the size of repayments, to pay off a mortgage earlier, to raise capital, or to consolidate other more expensive short-term debts. Remortgaging can save money on mortgage payments or let homeowners raise some money without selling their property. By switching to a new deal that offers a lower interest rate, with the current lender or a new one, it’s possible to reduce monthly repayments. Remortgaging can also let homeowners borrow more than they currently owe, which can give them a cash injection to cover any large expenses or to consolidate other debts. However, it is essential to think carefully before securing other debts against the home, as the home may be repossessed if the payments are not kept up. The ability to remortgage is based on an individuals circumstances, and as the costs involved can be very large, there may be prepayment penalties and other costs. The process of remortgaging can take around two months, but it may take longer, depending on whether or not all the paperwork is in order. Homeowners are advised to take advice from a suitably qualified individual before remortgaging.