Re-mortgaging in brief

A remortgage is a loan secured on a property.

In most cases the remortgage will restructure the repayment of the existing mortgage to a more affordable monthly repayment. This can usually be achieved by either lengthening the repayment term of the original mortgage, and or by taking advantage of lower interest rates.

A remortgage is also a very popular method for homeowners to consolidate an over-commitment to unsecured debts.

Where a remortgage is used to consolidate unsecured debts, there will be an increase in the amount of the money borrowed against the property. Enough equity will need to be released to repay all the unsecured debt as well as the original mortgage in full, leaving just the remortgage monthly repayments.

A remortgage can be an extremely effective way to consolidate debts and can reduce substantially the monthly outgoings of a tight household budget.

There are many reputable lenders who will lend up to 100%, Loan To Value (LTV), of the open market value of your property. However, this percentage will decrease depending on your credit rating. Generally speaking the more adverse credit you have i.e. mortgage arrears, CCJs, default notices, etc. the lower this percentage will be. The interest rates you will be expected to pay will also depend on your credit rating.

Before considering a remortgage as a suitable solution, be aware that any consolidation of unsecured debts via a remortgage will, by definition, increase the secured borrowings against your property and, as with all secured debts, property with a loan secured against it will be at risk, should you fail to keep up the regular repayments.