Many people obtain remortgages for various reasons,
but the most common reason for a home owner obtaining a remortgage
is simply because it will work out cheaper for them than their existing
mortgage plan. For example, if your current lender issued a mortgage
with a low introductory interest rate, you may wish to switch to a
different mortgage after this introductory period expires. Another
common reason for obtaining a remortgage is for debt consolidation,
if the remortgage is for a larger amount than that which is owed on
the existing mortgage.
As much as 95% of your property may be remortgaged, but if you have
already paid off a large proportion of your mortgage, you may be better
off if you instead consider an equity release plan, rather than a
remortgage. Two types of equity release plan are available:
• The Home Reversion Plan - this requires that you sell a
proportion of your home; the loan is redeemed upon confirmation
of this sale. The interest that the lenders receive takes the form
of the increase in the value of your property.
• The Equity Release Mortgage Plan - this plan works in a
similar way to a standard mortgage, however it has one big difference;
the interest does not have to be paid monthly. You can borrow an
agreed sum of money against your home, and not pay any interest
until the property is sold. It is at this point the lender redeems
the loan, plus any interest accrued.
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