REMORTGAGE: A BETTER OPTION TO SELLING YOUR HOUSE

2007-03-08 10:33:40

( Financial )



Remortgage involves the process of taking a new mortgage to pay off the balance of a current mortgage using the same property as collateral. It is a better choice than selling your house due to repayment delinquency or to earn more money. It also allows you to use the equity build up in your property and use it to fund other investments.

You can remortgage your property to the same lender or to another lender whichever gives the best deal for you. Remortgaging with your current lender can save you another process of valuation and credit checks. Other lenders though might offer you lower rates and higher loan amount.

Transferring your secured loan to other lender might incur early redemption charges for paying the loan in an earlier time that what it is originally designed for. It covers the income foregone by the lender that would have been applied to the loan if it has been paid on its original repayment period. Early redemption charge is usually a percentage of the loan or number of month’s interest. You have to decide whether paying the redemption period is beneficial or not. Ask your lender to give you the computation of all the charges that you will pay in case you decide to remortgage. Make sure that any mortgage release fees are included in the computation.

Analyse the savings that you will get from remortgaging your property. Calculate the cost of monthly repayments of the possible new mortgage. Add the costs of processing and valuation. Compare the total with your currently monthly repayments. Your remortgage costs will be lower if you can avail of remortgage package incentives offered by other lenders in the form of relinquishing costs on legal, valuation and arrangement fees.

Remortgage is better than loan consolidation or any form of debt management that will incur more costs in the end. It will not create much dent on your credit history since you are actually paying off your current mortgage. But you need to analyse well the various costs associated with remortgage as compared to staying within the repayment period of your current loan.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.