Mortgage Broker Bournemouth | What is a re-mortgage & when would you do it?

Hi, I am Peter a Bournemouth Mortgage Broker and over the 20 something years I have been working in financial services, the term ‘re-mortgage’ has and continues to cause confusion.

What is a re-mortgage?

The biggest misconception is that to re-mortgage means to re-finance your debt due to financial hardship. Re-mortgaging is also associated with meeting the cost of building work which is spiraling out of control. Whilst re-mortgaging can be used for these reasons, It is rarely the case. 

I recently completed a re-mortgage which saved a client £308.00 per month. Reducing their current mortgage payment from £572.00 to £264.00 per month. That is a whopping 53% reduction. They were not in financial difficulty and in full control of their outgoings, they simply had not reviewed their current mortgage for many years.

A re-mortgage is quite simply replacing your current mortgage to obtain more favorable terms, and/or to raise additional finance.

Why should I Re-mortgage?

If you have not reviewed your current mortgage arrangements lately, I strongly recommend you do so at your earliest convenience. Better still, call Key To Mortgages today and we will arrange to review it for you. 

As well as saving money, a re-mortgage can be used to unlock equity to fund bigger purchases or projects. The most common reason to raise capital is to complete improvements to your home, such as an extension. However, I recently helped a client   re-mortgage to lower their mortgage cost and buy a boat!

Capital raising can also be used to consolidate debt. However, a much greater degree of care and consideration must be taken in these cases. A mortgage is usually over a much longer term and you could end paying back more interest over the longer term. 

When should I re-mortgage?

The best time to explore your re-mortgage options is when you are nearing the end of your current benefit period. I suggest exploring your options 3-4 months before your benefit end date. This ensures your new deal is set up to take effect immediately at the end of your current benefit period, before reverting to a higher interest rate and increased cost.

In summary 

A re-mortgage is to reduce your cost, provide a more favorable mortgage, fund projects, purchases and for debt management.

At Key to Mortgages, Bournemouth we offer a free, no obligation review of your current mortgage arrangements, future needs and options available to you.

You may have to pay an early repayment charge to your existing lender if you re-mortgage

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for arranging a mortgage and the precise amount will depend on your circumstances. This will typically be £295 on application -  SOL8825