Remortgages And Secured Loans | Mortgage

by JamesMcHeggins

Remortgages, or refinance mortgages, are simply ways of refinancing an existing mortgage, either to obtain a better deal, lower interest rate, or to realise some equity. Depending on how the homeowners current mortgage deal ranks with others in the market, often determines whether that homeowner wants to remortgage through their existing lender or otherwise. Remortgages pay off the original mortgage and are used as a means of releasing additional funds. There is some general confusion surrounding Remortgages and it's relation to Secure Loans, as a part from being a type of secure loan, Remortgages can also be used to do or buy most things. Remortgages are a unique type of Secured Loan as they generally hold no restrictions to the amount that can be borrowed. Other forms of Secured Loans usually have restrictions of 25,000 to 100,000. Furthermore, secure loans do not change anything about the current obtained regulated mortgage.

There are various forms of Remortgage which can sometimes add to the confusion surrounding this form of financial assistance. For example, Fixed Rate Remortgages tie you into paying a set interest rate for a specified period of time and allows for effective budgeting with monthly repayments that remain stable throughout the fixed rate period. A Tracker Remortgage is a variable mortgage whose rate is usually tied to The Bank of England base rate, whereas an Offset Remortgage is a deal that allows borrowers to offset the savings that they have against their outstanding mortgage debt. Whilst holding the savings in a separate savings account instead of earning interest on their savings, the borrower will pay a reduced rate of interest on their remortgage. A Bad Credit Remortgage also known as an Adverse Credit Remortgage is available if you have adverse credit history or have been refused credit in the past. There are also specific options available for the Self-Employed and Landlords. With all these options available, it is strongly recommended that you seek advice when considering remortgaging your home to ensure that you find the best deal and interest rates for your personal circumstance.

With interest rates falling to their lowest over the past 19months, it is clear that the housing market is the biggest section of the economy to have been affected by the economic downturn. The latest figures from the Council of Mortgage Lenders show that remortgaging fell to its lowest ever level as a proportion of new mortgages in August, with just 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier. As capital rapidly dried up, lenders saw the risk of providing financial mortgage assistant too great and so many removed themselves from the market. The situation only spiralled further as the government were forced to bail out the various banks left in severe financial trouble.

However, as of October 2010, banks are showing significant signs of welcoming back remortgage loans with the number of remortgages jumping a huge 35% in September. As a result, at present, the Remortgage market is one of the most competitive markets with banks and building societies continually slashing interest rates in order to draw in custom. Remortgages now account for more business than properties, emphasising further its recent surge. Among the advantages of remortgaging is how it can help with the consolidation of higher rate debts such as credit cards or car loans. Similar advantages include; remortgaging to take advantage of a lower interest rate, to release equity, to pay for remodelling or expansion of your existing home or to pay for large expenses such as a child's education or wedding.

However, there are some disadvantages that must be considered if you are contemplating remortgaging your home. For example, following the credit crunch, lenders have become increasingly stricter regarding who they lend to and how much they lend. For this reason, lenders may be reluctant to lend if your employment has recently changed and your future income is somewhat uncertain, for example if you have recently become self employed. Similarly, if it hasn't been that long since you obtained your original mortgage and got it at a discounted rate you may face substantial penalties for early repayment. In order to qualify for a remortgage there are various steps to follow; your home must be valued, you must complete a detailed loan application, the lender will require conveyance work to secure a report and a solicitor will be engaged to ensure your previous lender is paid in full and to release any additional funds directly to you. The cost of remortgaging varies depending upon the lender, but in general, it will probably cost less than when you first obtained a mortgage!

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

As with any financial decision shop around to find thebest remortgage deals, and the lowest posssible remortgage rates for your circumstances.