Michael Challiner

Re-Mortgages – get up to date

Off with the old and on with the new. Remortgaging is simple and there are a whole lot of choices out there. Find out more.

If you’re thinking of improving your home, investing in buy-to-let or holiday property or maybe consolidating your debts, you’re probably thinking of re-mortgaging. If your current mortgage is now some years old, you’re probably out of date on what’s available. Forget the old “one size fits all” mortgages. Mortgages today are varied and there’s probably one just waiting for you.

In view of the fact that there are around 4,000 different loans available, obviously we can’t cover them all, but here are a couple of popular options:-

Flexible mortgages have no fixed term. It’s up to you to choose what you spend your loan on, however the loan is secured by your property so it is essential that you keep up to date with your monthly repayments, otherwise you risk losing your home. These mortgages can be based on either a repayment mortgage, which is more traditional, or an interest only mortgage. You can even have a mixture of both types.

These mortgages are ideal for someone who plans a break from their career for family commitments, such as child birth, or travel, re-training or whatever. You can reduce or suspend payments for a period. You can also increase payments and get ahead in order to either take these breaks or avoid interest costs. Funding your credit needs via this type of mortgage will be at a lower interest rate than general credit card use.

It is increasingly common to find that these flexible mortgages include a range of banking services, such a cheque books, direct debit facilities and credit cards. Generally speaking, though, the more flexible mortgages are inclined to be the ones carrying higher interest rates.

If you’re the type of person who likes to keep financial matters “compartmentalised” then the all in one nature of this type of mortgage may take some getting used to.

For the more traditional borrower, a repayment mortgage could be a possibility. The advantage of this is that, as long as payments are kept up to date, the debt will be paid off in the term of the mortgage. It is simple to understand and easy to manage. The monthly repayments are split between the cost of interest and the repayment of the capital borrowed. During the earlier years of the mortgage life a large part of the monthly payment will, for the most part, be paid in interest. As the years progress, however, more and more will go towards capital repayment.

There is not the flexibility in this method and unless overpayments are made, you’re in for the full stretch, so to speak. In the early years, very little capital is being repaid and overall you may pay more interest than in our earlier comparison.

For advice and ideas, an on-line mortgage broker is the answer They’ll be able to offer you details of the various mortgaging methods and interest rates and once they have your details they’ll come up with as many comparisons as you need.

Whichever method you choose, by re-mortgaging you can release some of the value of your home to spend on whatever you choose. Don’t be put off by the thought of all the hassle of surrendering your old mortgage. It’s perfectly easy to organise and people are doing it all the time. There will probably be a charge in the region of £300 for the release of deeds and possibly a fee of £25 for the transfer of funds. Lenders are keen to get your re-mortgaging business and will often offer fee-free deals and even pay your legal costs.

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