Remortgage

The term 'remortgage' simply means switching your mortgage deal and/or mortgage lender. Remortgages are very popular and there's reason behind it. Whether you are switching your deal for a better remortgage rate, conditions, service or increasing the size of your home loan, there are plenty of deals for remortgages available. Banks, building societies, specialist lenders and mortgage brokers can all accommodate your remortgage needs.

Increasing your mortgage

The extra amount you can borrow depends on how much your home is worth as well as on your ability to repay. If your property value and income are high enough, you may be able to increase your existing mortgage. But most lenders will extend your mortgage up to at least 80 per cent of the value of your property.

You might decide to increase or “top up” your mortgage to:

• cover expenses of improvements such as an extension or attic conversion
• buy a new car, pay for a holiday or meet other expenses
• pay off your higher-rate loans, a process known as debt consolidation.

If you decide to increase your mortgage, you will usually have to pay:

• a valuation fee
• legal fees and other charges
• a fee if you are breaking a fixed-rate agreement extra mortgage protection life insurance to cover the extra loan amount. 

Switching lenders

New mortgage deals appear on a regular basis, so it pays to keep an eye on the products available and make sure your interest rate remains competitive.

If a cheaper mortgage comes on the market, you may want to consider switching lender. You will most likely have to pay costs if you decide to switch. Ask your existing mortgage lender to review your rate first. If they decline to do so, look at whether it is still cheaper to switch.

If you decide to switch, you will probably have to pay:

• a valuation fee, although some lenders will offer you a sum toward this cost legal fees and other charges, but again some lenders may meet this cost or pay a sum toward it
• a fee to cover the cost of breaking your fixed rate if you don’t have a variable- rate mortgage.

Debt Consolidation

This means taking out a single loan to pay off a number of other loans. Mortgages are among the cheapest forms of credit available because the loan is secured on your home. If you roll all your expensive credit card debt and personal loans into your mortgage, you will be able to pay off these loans using the much lower interest rate attached to the mortgage. But despite the lower rate of interest on the consolidated loan, you can end up paying more because the new loan lasts much longer than the original loans. For instance, a typical car or personal loan is repaid over a three to five-year period. If you consolidate this into a 20-year mortgage, the longer term means that although your monthly repayments are lower, you will pay far more in interest over the life of the loan. Some lenders offer flexible repayment arrangements so that the personal loan portion of the new consolidated loan can be paid off within the original term, but at the lower rate of interest. You should also remember that the new, larger loan is secured on your home and if you fail to make payments, your home could be at risk.