Refinance Mortgages

by Paul McLelland

A Refinance Mortgage, also known as a Remortgage, is simply switching from the mortgage you have right now to a different one. People can do this to raise extra money, reduce monthly payments, pay off their debt sooner or for many other reasons.

Refinance Mortgages may not suit everyone, and this article aims to give some useful information to help you decide if one might be right for you. Here are some situations where you may want to consider one:


-Changed Personal Circumstances

If your circumstances have changed since you got your first mortgage, it could be that it's not the right one for you any more. You might have a higher salary than before and want to make extra payments now and then to pay off the mortgage early. Some lenders prevent this, so it could be time to switch to a lender who will let you. It could be that your partner is out of work and you need to skip a payment now and then. If your current lender won't let you, this may be another good reason to go for a Refinance Mortgage.

-Endowment Mortgage Shortfalls

When paying Endowment Mortgage repayments, some of the monthly payment pays off the interest on the mortgage, and some is invested. The invested money should then grow enough to pay off the money that was borrowed. Sometimes the investment fails to grow enough to pay the whole debt and there is what is called a 'shortfall'. This is the value of the debt minus the value of the investment. Homeowners with a shortfall are responsible for paying it off, and most people with a shortfall should consider a Refinance Mortgage. A repayment Mortgage is usually the best option in this case.

-Standard Variable Rate Mortgages

If you have this type of mortgage then it's likely that you will get a better deal by shopping around. These Standard Variable Rate mortgages usually have interest rates that are slightly higher than other mortgages. This means that you will have to pay the lender more money back than if you had a lower interest rate deal.


Situations where you may want to think carefully before remortgaging are:

-Near The End Of Your Mortgage

If you're near to the end of your repayments, the cost of switching to a new deal would probably be more than the savings you make. In this case it would be better to stay with your present deal. Also, some lenders have a minimum amount which they will lend. Near the end of your mortgage you will probably be below this minimum amount anyway.

-Financial Penalties

Your present mortgage lender may have some severe financial penalties if you decide to change to a different lender. Sometimes the cost of these penalties means that you are better not switching to a different lender.


Finally, please remember that this article does not constitute financial advice, and that you should get professional guidance from a qualified adviser if you want to change your mortgage.

Paul McLelland has written more easy-to-understand articles on Refinance Mortgages. See them now at http://refinanceinfo.co.uk

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