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Owning a home is the stuff of dreams from many a Scot. Oftentimes, the hard part is lining up a mortgage that stays within the budget while still allowing a buyer to get exactly the kind of house they want. Down the road, remortgaging can also be a challenge. However, the experience doesn’t have to be so bad.
A mortgage advisor in Scotland is the most qualified person to help homeowners figure out whether or not remortgaging is in their best interests. And if it is, the advisor can point homeowners in the right direction in terms of lenders and the deals they offer.
Are you considering a remortgage deal? If so, be sure you know everything there is to know about remortgaging before proceeding. Remortgaging could be the best decision you ever made. But it could also be the worst one, too.
An Introduction to Remortgaging
Remortgaging is the practise of transferring your mortgage from your existing deal to a new one. A homeowner might work out a new deal with the current lender or go with a new lender entirely. The big question is, why?
A new mortgage deal could improve your financial situation considerably. Remortgaging could lower your monthly payments, for starters. It could also:
- Lower your interest rate.
- Give you better terms.
- Release any equity you already have in the property.
The underlying point is that remortgaging can help when it makes good financial sense. But that doesn’t mean doing so is always a smart move. There are valid reasons for staying with your current mortgage deal rather than trying to remortgage.
The Remortgaging Process in Scotland
Remortgaging a home in Scotland shares a lot of similarities with obtaining a first mortgage. It starts with evaluating your needs and financial situation. If a preliminary assessment indicates remortgaging is probably a smart move, the remaining steps are:
- Having the property revalued.
- Comparing offers from multiple lenders.
- Applying for the new mortgage.
- Completing legal and surveying requirements.
- Accepting a formal mortgage offer from the lender.
Completing the process essentially means using your new mortgage to pay off your old one. If there is any money left over, it is cash in your pocket. Having money left over would indicate that remortgaging released equity you had built up over the years of paying the old loan.
Releasing equity is a good way to leverage the money for other purposes. Perhaps you want to pay down other debts. Maybe you have kids’ university bills or are looking to put money away for retirement. Regardless, releasing equity through remortgaging is a great way to put the value of your home to work for you.
Mortgage Lenders vs Brokers
It’s important to understand the difference between mortgage lenders and brokers before you start comparing deals. A mortgage lender is more or less a bank or building society that makes home loans. Well known examples include Halifax, HSBC, Furness Building Society, and Leeds Building Society.
Where a mortgage lender is directly responsible for writing a mortgage, a mortgage broker is not. Instead, mortgage brokers represent banks, building societies, and private lenders by marketing their products to borrowers. If you were to work with a bank or building society, you would be limited to only the deals that institution offers. But if you worked with a mortgage broker, you would have access to deals from multiple lenders.
Other Reasons to Work With the Broker
Having access to a wide range of lenders and products is the primary advantage of working with a broker. But there are other valid reasons, including:
- Access to a broker’s expertise in loan comparisons.
- Qualified assistance with paperwork and administrative tasks.
- Customised advice based on your unique financial position.
A mortgage broker gets paid by arranging a mortgage on your behalf. He is paid by the lender. Nonetheless, it is still in his best interests to make sure you get the best possible deal and one that fits your circumstances. Otherwise, you become an unhappy customer who does not refer that broker to others.
A Final Word About Remortgaging
Remortgaging might seem attractive if you are currently struggling to make your monthly payments. Getting a new deal can stretch things out for a longer amount of time, thereby reducing how much you pay every month. But be careful. When it comes to mortgages, time is the enemy.
Mortgage lenders earn their money on interest. Given that interest is calculated on an annual basis, lenders make more the longer you pay on your loan. So while remortgaging could mean lower monthly payments, it could also mean paying more over the entire life of the new loan.
You’ve been introduced to the basics of remortgaging and how it works. There is a lot more to know on this complex topic. If you are thinking of remortgaging, do your homework first. Ask questions. Be sure you know what it’s all about before moving ahead.