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A re-mortgage is the process of paying off your existing mortgage with the proceeds of a new mortgage which will be secured against the same property.

There are three main reasons for re-mortgaging:

Obtain a better rate    

The majority of mortgage products will have a certain lifespan which is normally between 2-5 years. During this initial period, the nature of your repayments will vary depending on the type of mortgage product you have. However, one thing these products will all have in common is that after the specified product period has come to an end, the interest rate will revert to the Lenders standard variable rate (SVR) which is more often than not going to be higher than the rate originally applicable to the previous product.

For this reason borrowers either look to obtain a product transfer from their existing Lender, which involves exchanging the existing product with an alternative option from the same provider. Or, they will look to re-mortgage with an alternative Lender in order to achieve a more competitive product.

Raising Funds

Many borrowers look to re-mortgage in order to raise additional funds to put toward a specific cause such as home improvements or the deposit for an onward property purchase. This involves obtaining funding from an alternative Lender which exceeds the existing balance remaining on the current mortgage; this mortgage is then redeemed and replaced by the new advance. The amount you are able to borrow is dependent on the equity held within the existing property and will vary between different providers subject to the purpose of the funds. 

The alternative option to this is to obtain a “further advance” from your existing Lender. This involves additional funds being added to the outstanding mortgage balance, yet subject to a different product to the residual balance.

Transfer of Equity

This is where a party is added or removed from the title deeds (documents showing ownership, as well as rights, obligations, or mortgages on the property) and involves amendments to the outstanding mortgage deed. 

The Process  

The overall process is similar in nature to that of an ordinary purchase. Once a Lender has confirmed that you are able to re-mortgage your property accordingly, they will arrange for a survey to be carried out to ensure that the property is adequate security for the loan required. Upon satisfactory receipt, a mortgage offer will be issued and subsequently funds can be transferred to the associated parties. 

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