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Remortgages are a homeowner loan specifically for homeowners as remortgages must be secured on the asset of a residential property.

A remortgage involves paying off the existing mortgage on the property and replacing it with a new mortgage, ie. a remortgage, with a different mortgage lender.

A remortgage can be taken out for the exact same amount as the current mortgage, and this is called a like for like remortgage, and the remortgage in this case will simply be to obtain a better rate of interest, with no extra funds being raised.

Most homeowners have a tie in period with their mortgage which is most usually a two or three year period. During this time there is an early repayment penalty to be paid if the homeowner wants to leave their current mortgage lender.

An early repayment penalty is usually 2% of the balance left on the mortgage, and this can run into several thousand pounds, making the average mortgage borrower stay with the one lender during this tie in period.

However it is not uncommon for homeowners to remortgage for a better interest rate during the tie in period as sometimes because of bad advice or very frequently because they sought no advice at all, the interest rate for their existing mortgage is so high that it is worth paying the early repayment penalty to obtain a much better rate of interest by remortgaging with a different mortgage lender.

Sometimes however mortgage borrowers realize during this tie in period that their choice of their current mortgage has been a very poor decision, and that they would at the end of the day be better of paying the early repayment charges, and obtaining a better rate by means of a remortgage sooner rather than later.

In the past people were less sophisticated regarding financial matters and many mortgage payers in the past simply kept their existing mortgage in place and it simply did not enter their heads that there were many different options regarding remortgages out there.

The existing mortgage lender will offer their standard variable rate at the end of the tie in period but this will not always be the best mortgage deal around.

The advent of the computer age has also played it’s part in educating homeowners that there is plenty of choice in the market place.

He or she will deal with the whole of the market for remortgaging and this will relieve you of the need to make numerous phone calls, or a cold walk down the high street to find out the best remortgage deal for you.

Learn more about remortgages. Stop by Champion Finance’s site where you can find out all about remortgages and what it can do for you.

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