Home buyers guide: Remortgage and safe money

A remortgage is just like taking out a normal loan, with one main difference. You are raising money to pay off the old mortgage - at a better rate, for greater flexibility or for a specific purpose. You don't have to change lenders, but many do.

Benefits include:

•	Saving money - by reducing your monthly outgoings. Speak to an adviser now!
•	Reducing the loan - being able to overpay without redemption penalties.
•	Releasing equity - to make improvements, take a holiday of a lifetime or buy a second home.
•	Switching to a more competitive lender or product - for example, if your current rate is too high or you have concerns over an endowment mortgage.
•	Greater flexibility - by switching to a scheme which allows you to underpay, overpay and have the means to release equity.

Costs and penalties

•	You cannot use the original survey - so you will be charged for a new one.
•	Budget for legal and administration fees - although they should not be a high as your original loan. Many lenders now offer deals which refund these costs on completion- provided you use their recommended surveyors and solicitors.
•	Beware of redemption charges on your existing mortgage if you are still within an introductory offer period with a fixed, discounted or capped rate of interest.
•	Some loans also have an overhang period after the introductory time.
•	Weigh up the savings against any costs and penalties. It can sometimes be worth paying these for the benefit of the new loan.

•	It takes less time because you're not buying a home - around six weeks.
•	If you need to act quickly, you may find a fast track service to complete in a week.
•	Try and avoid two sets of interest charges. If you are remortgaging with a lender who charges interest to the end of the month, you should remortgage on the first of the month.

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