This means replacing an existing mortgage with a new one from a different lender.
REASONS TO RE-MORTGAGE
- To obtain a more favourable interest rate and reduce monthly payments.
- To raise funds for home improvements, deposits on additional properties, a new car etc.
- Cheaper to extend than move? – You may find that it could be cheaper to re-mortgage and build an extension, rather than move home and incur costs such as estate agent fees, moving costs, stamp duty, etc.
- Debt consolidation – this may reduce monthly costs, but there are risks associated with this.
- Costs to Consider – you may incur an Early Repayment Charge with an existing lender, especially if you are in a fixed rate deal.
Some lenders charge a sealing / discharge fee for releasing the deeds.
There may be legal fees associated with re-mortgaging, typically £400 – £600 as well as valuation fees. Most lenders now offer incentives as part of their re-mortgage packages (such as free valuations and free legal services).
EQUITY RELEASE MORTGAGES
As you enter later life, you may want to release some of the equity in your home. This is a big step to take, so it is vital you seek financial advice. Equity Release schemes are becoming an important part of retirement planning. These schemes can be used to make your retirement more comfortable and to open up new and exciting possibilities. Our home/main residence is often the single largest asset that we own and releasing the value held in the property can assist in financing a range of needs for later in life, without the need to sell your home or borrow from other sources.
For example, as you get older, you may need to pay for long term care, adaptations to your home, or perhaps for more enjoyable things like a new car or a conservatory. However, once you have retired and do not have a regular income from employment, it is not easy to borrow money, or put savings to one side. Releasing the equity in your home can be the ideal solution.
The two main types of equity release product on the market today are:
Home Reversion Plans – You sell your home (or a share of it), in return for a lump sum or monthly income (or a combination of both). Technically you become a tenant living in your own home. When the property is sold (usually after your death); the Home Reversionary Company will be paid.
Lifetime Mortgages – You receive a lump sum or monthly income (or both) and pay nothing. The interest on that money is ‘rolled up’ into the loan. The amount borrowed plus the interest is repaid out of the proceeds from the sale of the property after you die.