UK mortgage refinance / UK remortgage

UK mortgage refinance or a UK remortgage is where you replace an existing loan on your property with a new one.

Over time your current mortgage may become uncompetitive because there is a tendency for lenders to offer more favourable rates new customers rather than existing customers. You can remortgage from an uncompetitive interest rate to a better one to reduce monthly interest payments.

You may have also grown equity in the value of your property, where the value of your house now exceeds the current mortgage amount. So, using UK mortgage refinance, you can release the equity that has accumulated in your property's value.

For each of these situations you can use mortgage refinance to make sure more of your money goes into your pocket.

Benefits of a UK mortgage refinance / UK remortgage

By taking a UK remortgage product and remortgaging, you may be able to reduce your monthly interest payments or speed up the payment of the capital loan, so reducing the overall amount you pay for your house.

By taking a UK mortgage refinance or UK remortgage product you may be able to release equity that has built up in your property value for alternate use. Using equity in this way is often a cheaper way of financing than other forms of loan.

Depending on the economic environment, by remortgaging you may be able to switch to a more favourable type of mortgage. For example, switching from a standard variable rate mortgage to a fixed rate mortgage at a time of low interest rates.

Risks of a UK mortgage refinance / UK remortgage

If you are remortgaging to refinance your property to release equity, you will gain a lump sum immediately, but will end up paying higher monthly loan payments. If the economy then turns down and interest rates are forced up, you may not be able to maintain the higher payment on your UK remortgage loan and your home may be at risk.

If the property market falls, after remortgaging to refinance your property and release equity, you may find yourself in a negative equity situation, where your UK remortgage loan becomes larger than the value of the property.