Remortgage
In time of declining interest rates, it is often beneficial to switch to a more favorable interest rate from a different lender. This process is called remortgaging, (aka. refinancing) basically it is the process of paying off one mortgage with the proceeds from another mortgage using the same property as security. The term is primarily used in the United Kingdom while in the United States the term refinancing is more common.
Generally, remortgaging doesn’t involve any physical moving it is simply the transfer of a mortgage from one lender to another. Homeowners may choose to remortgage for a variety of reasons but most commonly it is to reduce the overall monthly mortgage payment amounts. However other reasons may include to reduce the size of repayments, to pay off a mortgage earlier, to raise capital, or to consolidate other more expensive short term debts.
If a homeowner is simply switching from one product to another with the same lender; this is not considered a remortgage which involves the removal of one legal charge over a property and its substitution with another in favor of a new lender. Remortgaging charges can be steep and so the other benefits must be weighed against the costs carefully in order to determine the payback period of the benefits compared to the costs involved with the new mortgage under the remortgage plan. Read more about Remortgage
