The Benefits of Remortgaging Your Home for Financial Flexibility

Do you need liquidity to remodel your home, to undertake or simply to buy a second home? If this is your case, we present you the option of remortgage home. It is a financial alternative that allows you to enjoy a new loan offering the home as collateral.

However, it is good that you know very well what does this procedure involve y what are the benefits. In addition to knowing what precautions to take before carrying it out so as not to incur any problems.

What is remortgaging a home

Remortgaging a home means re-mortgage a home. Basically, it consists of get a loan Putting the house as a guarantee of payment. The difference with a normal mortgage is that in this case a home that had already been mortgaged previously is mortgaged with the aim of obtaining a new loan.

As a financial operation, this option consists of pay off an existing mortgage on a home and mortgage it again through a new loan. In any case, this It can be done before you have finished paying the first mortgage. So the new loan can include the remaining amount.

The most common is that the money received with the remortgage is equivalent to the sum of the remaining amount of the initial mortgage plus the new capital that is requested.

On the other hand, a new contract must be made for the new mortgage, which will allow the conditions of the loan to be modified. So you can switch between a fixed, mixed or variable term mortgage. You can also change the amortization years.

Why remortgage your house

Remortgaging a home is a relatively simple way to get liquidity, so it can be a useful operation in certain situations and financial needs. In addition, it is a way to change the conditions of the loan that you already received, so you can be beneficial if the terms of the contract are well negotiated.

The only condition is that you must re-place the home as collateral, so you will have to mortgage it again. For the rest, it is a way to get money and repay the loan with interest by making payments little by little.

When to remortgage a home

Remortgaging your home is a way to quickly obtain a significant amount of money, so there are various circumstances why you may feel motivated to do so:

housing reform

It is true that there are loans to make home renovations, but depending on the magnitude of it, it may be a good idea to apply for a mortgage.

In these cases, it is possible that you can get better loan conditions and with less interest If you remortgage your home instead of applying for a reform loan.

Buy a second home

This is also one of the most prone situations to decide to remortgage a house. On many occasions it can be easier to remortgage the current house to buy another to get a mortgage for a new home.

To undertake

If you’re thinking of start a business, you can apply for a new mortgage for your home. It is one of the easiest ways to get the necessary capital to start a business venture.

To unify loans

If you have several loans, such as credits, mortgages or credit cards, it may be good for you centralize all installments in a single mortgage. To do this, you can request a new mortgage on the home, so you will only have one monthly payment and you will be able to keep your accounts more organized or controlled.

How to remortgage a home

If you already have a loan for your home, you probably already know many of the steps you must take to remortgage your home, since they are very similar processes. Although there is no one method that can be applied in all cases, you will most likely have to take steps much like those for a first mortgage.

Request a mortgage from the bank

The first thing is to inform the bank in which you have the first mortgage of your intention to make a new mortgage on the home. These will make a feasibility study on the operation. To do this, they will take into account the data they already have about you, such as the status of your current mortgage, your level of indebtedness, your credit history or your solvency and employment situation.

In addition, they are likely to seek new information, such as the home appraisal. This information will allow the bank to determine if the operation is viable and, if it is, offer an appropriate financing plan to the client.

Cancel the previous mortgage

If the bank approves the operation, the existing mortgage must be cancelled. This is a bureaucratic process that may entail certain expenses for the client related to the early mortgage repayment.

Formalize the new mortgage

In this case, you must set the new mortgage contract with the new conditions. What is still to be paid from the first mortgage will be added to this new mortgage along with the new loan.

After signing the new contract and paying the expenses of applying for a mortgage, the money corresponding to the new loan will be received and the amortization period of the new mortgage.

What are the costs of remortgaging a house?

The cancellation of the previous mortgage and the signing of the contract of the new loan implies certain expenses of the transactions in question. Therefore, you must be very well informed about how to carry out this process.

Mortgage Payoff Fees

As long as it is established in the contract, a fee must be paid advance payment of the mortgage. This is regulated by law, which sets a maximum that can vary depending on various factors, such as the interest rate or the date the loan is signed.

In addition, the deed of cancellation of the mortgage must be formalized and paid before a notary and the charge that exists on it in the Property Registry must be annulled. If you hire an agency to carry out the procedures, you must also pay for those services.

Expenses of opening a new mortgage

When you receive the new loan, you must pay the expenses involved in receiving a new mortgage. Among them, the cost of the procedures carried out by the bank, the expenses of appraisal of the house and the expenses associated with the deed of the same.

Conclusion

The option of remortgaging a property can be a good way to get quick money for a project you have in mind. However, it is very important that you consult with your financial institution what are the conditions that you must meet and study carefully if it is the best way to obtain financing for your specific case.