A re-mortgage is when someone takes out a new mortgage to repay their existing one in order to realise equity and on occasion to reduce monthly payments. In order to do this you will need to transfer your existing mortgage agreement to another lender.

A re-mortgage will mean that the new lending company will pay the old provider the balance of the amount outstanding and you will continue making your payments to the new lending company. By re-mortgaging your home, you could save substantial amounts of money on your monthly payments.

One of the more common reasons for re-mortgaging your property is to reduce costs. By simply changing to a lower interest rate you can benefit from lower monthly repayments. You could also keep the monthly repayments the same, therefore, enabling you to repay the loan quicker and reducing the overall term of the mortgage.

When you are looking at re-mortgaging your property, the best advice would be to look around at the lender market at the different offers they have. All mortgage lenders will offer mortgage advice, as they will want to gain a larger customer base. By helping more people, they will have a better chance of gaining more customers. You should use this to your advantage. You should visit a number of different mortgage advisers, which will later enable you to use their knowledge to obtain a better mortgage deal.

The majority of the motgage advicer will guide you in the same direction. They will tell you that you must firstly look at your existing mortgage to see what benefits problems you have with it. If you feel that you are paying excessive rates of interest, compared to other lenders then a re-mortgage may save on your monthly payments. Due to the rapid rise in property values over the past few years, many people now have mortgages which are well below their home's current value. The difference between the property value and the mortgage debt is known as equity. The majority of mortgage lenders will allow you to increase the size of the mortgage in order to use some of this equity. The cash raised can be used for a variety of purposes, such as home improvements, holidays, a new car, or the consolidation of existing debts.

A re-mortgage is a great way of saving money, as it is likely to lower your mortgage interest rates. A mortgage is also one of the cheapest forms of loans around, so if you are looking to raise additional finance, it would be advised to re-mortgage your home.

There are various reasons why someone would re-mortgage. The majority of the time, it is just to reduce the monthly mortgage payments, although it has become an increasingly popular way for people to consolidate their debts. They will, therefore reduce the overall household outgoings each month. The advantage of borrowing money against your property is that the rate will almost certainly be better than if you took out a personal loan, and because you can spread the cost over the remaining term of the mortgage, the repayments are lower.

Arranging a re-mortgage can be a relatively simple process. There are no chains of buyers to worry about (like there are when you move house), so the whole process can often be completed in a few weeks. The re-mortgaging process from start to finish normally lasts between 4-6 weeks. In terms of costs there is no stamp duty to be paid, as you are not purchasing a property. Many lenders will pay some or all of your valuation and legal fees. However in some cases there may be an arrangement fee or booking fee from the new lender.

A Re-mortgage does have its problems though. The most visible one being that the repayment term of the mortgage will extend for another long period. The borrower needs to again spend on several fees like property valuation fees, legal fees, and administration and arrangement fees. This is excluding the early repayment penalty that some lenders will include for early settlement of their existing mortgage.

The decision on whether to re-mortgage or not must be taken with adequate caution. There have been times when borrowers have entered into a bad mortgage deal, simply to escape an existing taxing mortgage. The answer to a best deal mortgage is to being fully informed.