First of all what is a remortgage? A remortgage is a form of secured loan which pays off your existing mortgage and is arranged through a different mortgage lender.
Sometimes homeowners simply remortgage because they have come to the end of their current mortgage deal and want to obtain a lower interest rate. They may only want a like for like remortgage which means if their existing mortgage is for £130,000, they take out a remortgage for that amount.
If you have equity in your property you may want to remortgage for a greater amount to carry out homeimprovements for example or to pay for a large purchase such as a motorhome or a boat. You can even buy a second home for holidays, weekends etc. with a remortgage although some remortgage lenders will not advance funds for a second home purchase.
Before settling with a particular remortgage lender make absolutelyy certain that they are in full agreement with the purpose of the remortgage.
A remortgage is commonly used for debt consolidation. This means that you consolidate your existing mortgage balance, credit cards, loans, hire purchase, etc. into one. This not only tidies up your borrowings but also can save you a great deal of money. This is one time when you are much better to have all your eggs in one basket contrary to the old saying.
If you have a current mortgage of say £150,000 and other debts totalling £40,000 you would require a remortgage of £190,000. You could also, if you want, borrow a little more if you want to do homeimprovements, take a holiday etc.
A remortgage used for debt consolidation can save you a fortune every month.
You can still get very good remortgage rates, especially if you have substantial equity in your propery.Equity is the difference between your mortgage balance and the value of your property.
If you require a 90% plus LTV remortgage for debt consolidation or in fact for any purpose, the remortgage rate will be higher than it would be if your LTV was 75% or less. However whatever rate you obtain for your remortgage it will be a fraction of your 20% APR credit cards which can even often have the attrocious interest rate of up to 40%.
Compare this to a remortgage rate of under 4% in some circumstances and the savings become crystal clear.
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