What is a remortgage? Well, put simply, a remortgage is an option you have when...
What is a remortgage? Well, put simply, a remortgage is an option you have when you have an existing loan on a home.
Why would you want to remortgage? Well this question is a little tougher than the last because there are so many answers, but let’s look at a few. One of the main reasons individuals decide to remortgage is their current mortgage. Here is an example: A family had to file bankruptcy, but they still needed a place to live. So they decided to see what company may offer them a loan. The loan they received was an adjustable rate mortgage that has been increasing for the last two years, every six months. They began paying 1000 pounds a month, and are now paying 1600 pounds a month for the home. Their income is struggling to cover that new cost as well as their other expenses. Remortgaging for them could be the best thing they could do. The bankruptcy is old enough and their credit scores have improved enough that they are able to get a fixed rate mortgage. The mortgage rate is going to be almost half the interest they were paying.
As you can see by the example remortgaging is a great option if you can switch the type of mortgage you have to gain a better interest rate and therefore better monthly payment. For many of us that is our aim when we remortgage, but other options are of course remodelling, paying for college, and other instances that we need a little extra cash for.
