Thursday, November 10, 2005 

UK residents remortgaging for their lives

With the number of UK residents remortgaging climbing ever higher, Abbey has discovered that many people are changing lender for lifestyle rather than financial reasons.

Recent figures from the Council of Mortgage Lenders show that almost as many people are now taking out mortgages on existing properties as are using them to finance property purchases.And overall 48 per cent of homeowners have remortgaged their homes in the last five years, Abbey revealed today.

The majority (66 per cent) have done this to improve their repayment costs, but many have taken out new loans on their homes for lifestyle reasons.

"More and more people are now re-mortgaging to help them change their lifestyle or career and to own their own home quicker, not just to reduce their monthly repayments," said Gary Hockey-Morley, Abbey's director of remortgages.

Remortgaging can wipe out debts and save you money

Mortgage industry experts are asserting that remortgaging can consolidate credit card, overdraft and personal loan debts, and still save people up to £150 in repayments.

Mortgage advisers Charcol point out that adding unsecured debt to your mortgage and switching lender could help you manage your debt more effectively and save you money on monthly repayments.

According to Charcol, a UK homeowner with a mortgage worth £200,000 and £40,000 of unsecured debt could save £150 a month on repayment fees by consolidating the debts into one mortgage and switching providers.

This is because about one in three mortgage holders are currently paying their lender's standard variable rate, typically measuring about 6.8 per cent - but the best, market-leading deals chime in at about two per cent lower, meaning people have a lot to gain if they remortgage.

Re Mortgage to avoid interest-only calamity

Thousand of UK homeowners are being advised to seek a remortgage deal to replace their current interest-only mortgage. The warning comes as new research from Abbey reveals that more than a third of interest-only mortgage holders have no idea how they will repay the capital sum once their mortgage term ends.

As many as a quarter of all mortgage holders have signed interest-only contracts, where monthly repayments cover the interest paid to the lender but not the amount borrowed. A spokesperson for a leading mortgage brokers told the Money Mail: "Interest-only mortgages are a real help in bridging the affordability gap and getting people on to the ownership ladder.

"But it can also be a foolish course of action if no clear plan exists to repay the capital during the term. " He advised homeowners: "You need to start saving as early as possible or switch to a repayment mortgage within two years.

Remortgaging is very popular. And with good reason. Whether you are switching your deal for a better rate or more suitable conditions, or increasing the size of your homeloan, there are plenty of deals available. Banks, building societies, specialist lenders and mortgage brokers can all accommodate your needs. Our handy mortgage calculators can swiftly work out how much you could save by remortgaging to a lower interest rate, or how much it would cost you to increase the size of your loan. And our Best Buy tables will give you an idea of the rates on offer for remortgaging. Bear in mind that most lenders charge fees, but some do offer fee-free deals for the cheapest remortgage available.

Remortgage guide

Remortgaging can save you a lot of money. Sometimes it makes sense to move your mortgage rather than move house.

In some borrowers cases, thousands of dollars in interest can be saved by changing to a new mortgage deal. Remortgaging is when a borrower replaces a loan with an existing lender and usually switches to a new lender. Sometimes your own lender will have a better deal than the one you are currently on. So remortgaging in your own lender's institution can sometimes be the best option, cutting out any new search fees, valuation and credit checks. Why remortgage?

Well first up, by moving your mortgage you must figure on what you have to gain.

Remortgaging can realize the equity build up in a property and use it to finance further investent. By remortgaging you can move from a fixed rate of interest or visa-versa making managing your finances easier to manage.

As your credit rating or financial position changes then a new lender might offer you a better deal on interest rates. Remortgaging would give you he opportunity to take advantage of this. Of course if another lender offers yoy a better deal, before remortgaging you should take that offer to ypur existing lender and see what they can offer in response. Something to be vary wary of is if on your existing loan is subject to any early redemption charges.

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