How can you save money by remortgaging? Everyone is always talking abt it. How does it work in practice?

Question

Any thoughts, advice help welcome!

Answer 1

Some years ago I was a financial advisor and on every remortgage I saw, people were essentially replacing one debt for another, often over a longer period to reduce immediate costs yet increase the total amount paid back over a longer period of time. Seldom was it in their interests although on paper it may well have seemed that way. The only way you will save money is to refinance with a more competitive lender ( when you will be leaving an uncompetitive lender behind ). But you must look at other things like arrangement fees, redemption fees, what happens in the future to the rate etc. Refinancing over a longer period is fine if you wish to cut present day costs but remember you will pay a lot more back overall. It's all down to a question of current need but be careful. And in every event, please try and go to leading high street lenders where in theory they should be clearer deals.

Answer 2

Generally one would remortgage if they can get it at a lower interest rate.....&/or to get a higher mortgage based on a higher valuation of the Property.
Check with Lender of existing mortgage if you will be charged any penalties or fees. They might negate any gain made.

If you can remortgage (no fees etc...) be sure to get quotes from different Lenders. There can be sizeable differences.

Then do your list: Pro/Con and decide.

Simple? Yes!
Good luck.

Answer 3

Refinancing at a lower interest rate should save you money, but sometimes they charge points and other fees that can offset the savings. Usually they put those amounts on the end of the loan, so you should do the math and make sure they're not cheating you in the long run.

Answer 4

You can borrow on your LTV or Least Terminal Value. That is if you have certain percentage of the mortgage already paid up then that is the LTV. If you have a $100000 mortgage on your home and you have already paid up 30000, you can borrow for 30000 and use it to invest in a new home and rent it out. If it has good real estate value your rental income will cover for the mortgage and there will be extra available to pay off your loan. This way you can pay off on your new investment without needing to spent any money to invest and ultimately you will wind up with a new asset without having spent any money to purchase it in the first place. I have heard of people owning more than one home using this technique. Of course the spread between the mortgage payment and rental income generated should be favorable.

Answer 5

you can look around to remorgage and remember to check the interest rates if it is lower than the one you already have, then your repayments will be lower, but please remember also when you do remorgage then the lender will have to survey your property and will charge a fee for that also charge for setting up the loan. after all that it may still be worth the swap in the long term, but check everything before commiting...i know ive done it!!!

Answer 6

If you have an adjustable rate mortgate (ARM) then you might be able to refinance to a fixed rate - this would protect you from having your interest rate, and therefore your payment, suddenly go up a lot.

Answer 7

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Answer 8

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