Remortgage & Capital Raising

  • Obtain better rate.
  • Capital to pay off debts.
  • Capital for home renovation.
  • 2nd Charge loans
  • Help children with depoit, education.
  • Deposit for other property.

Remortgage is to move from your current lender to a new one. It is not capital rasing (called further advance) or changing the product(called product transfer) with exisiting lender. Remortging with new lender can also involve raising capital from the property or getting a better rate/product.

Usual reasons for remortgaging are listed above. Most common time for a remortgage is at the end of a rate tie-in period. It is also a time to assess all your financial needs and make adjustments if neccessary.

If the need is purely capital raising and the rate is tied up in a penalty, a second charge loan can be used.

Remortgage & capital raising options:

  • Remortgage – moving the mortgage to a new lender for the purpose of obtaining a better rate or raising capital.
  • Product transfer – transfering mortgage to new rate at the end of rate control period, but remaining with exisitng lender.
  • Further Advance – obtaining additional funding from exisiting lender based on equity of the property.
  • Second charge loan – raising capital from the equity in the property from a different lender (hence second charge). The main mortgage lender is usually called the first charge lender, as in the event of repossession they have first priority on outstanding debt.

Pros

  • Remortgage – likely best option to find a better rate as another lender may be more competetive. Most new lenders provide free valuations and legal fees for new customers.
  • Product transfer – quickest option to change product as staying with exisiting lender. Might not obtain the best rate. However, least costly.
  • Further advance – can be quickest method for additional borrowing as exisiting lender will have a payment history.
  • Second charge – useful if current lender or a new mortgage is unable due to low credit score.

Cons

  • Remortgage – takes longer as need to change lender. There may be additional expenses as legal charge to new lender needs to be registered.
  • Product transfer – may not obtain the best deal with exisiting lender.
  • Further advance – current lender may not provide additional funding or curtail maximum available.
  • Second charge – the rate is always higher. May need permission from current lender, which can be refused. More expensive than other options.
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