Remortgaging & Equity Release

A remortgage refers to the process of switching your existing mortgage to a new one, typically with a different lender or an alternative product offered by your current lender. It involves paying off your existing mortgage loan by obtaining a new one on the same property. The primary reasons for remortgaging include securing a better interest rate, releasing equity, or changing the terms of your mortgage that are coming to an end, our advisers are able to assess your existing terms 6 months before the expiry of your existing mortgage, which provides you with an option to secure a rate in advance and ensure you receive the most competitive option at the time.

1. Residential Remortgage

This type of remortgage applies to individuals who own a residential property, which is their primary residence. People often consider a residential remortgage to take advantage of market interest rates, reduce monthly repayments, or switch to a more suitable mortgage product.

2. Buy-to-Let Remortgage

If you own a property that you rent out to tenants, you might opt for a buy-to-let remortgage. This type of remortgage is specifically designed for landlords and property investors. It enables you to replace your existing mortgage on the rental property to obtain a competitive rate, increase rental income, or release equity for other investments.

3. Equity Release Remortgage

An equity release remortgage allows homeowners, typically older individuals, or retirees, to unlock some of the value tied up in their property. This can be achieved by remortgaging the property and borrowing against the equity. The released funds can be used for various purposes, such as home improvements, debt consolidation, or supplementing retirement income.

4. Debt Consolidation Remortgage

This type of remortgage involves consolidating multiple debts, such as personal loans or credit card balances, into a single mortgage loan. By remortgaging and increasing the mortgage amount, homeowners can pay off their existing debts and streamline their finances. This can simplify repayments and potentially reduce monthly outgoings by benefiting from lower mortgage interest rates.

When considering a remortgage, it's essential to weigh the associated costs, including arrangement fees, legal fees, and potential early repayment charges from your current mortgage. Consulting with a mortgage advisor or a financial professional can help you assess whether remortgaging is the right option for your specific circumstances and financial goals.

Equity Release Mortgages

An equity release mortgage, also known as a lifetime mortgage, is a financial product designed for homeowners who are typically aged 55 or older and wish to access the equity tied up in their property without having to sell it or move out. It allows homeowners to unlock a portion of the value of their home and convert it into tax-free cash or a regular income stream.

When you take out an equity release mortgage, the lender provides you with a loan that is secured against your property. The loan amount is determined based on factors such as your age, the value of your home, and sometimes your health. Unlike a traditional mortgage, you don't have to make monthly repayments towards the loan. Instead, the interest on the loan accumulates over time and is typically repaid when you pass away or move into long-term care. At that point, the property is usually sold, and the proceeds go towards repaying the loan. If there is any remaining value, it will be passed on to your beneficiaries.

Equity release mortgages come in various forms, including lump sum schemes and drawdown schemes. With a lump sum scheme, you receive a one-time payment, whereas with a drawdown scheme, you have a reserve of funds that you can access as needed. Interest is charged on the amount you borrow, and it can be fixed or variable.

It's worth noting that taking out an equity release mortgage can have long-term financial implications, such as reducing the inheritance you leave behind for your loved ones and potentially affecting your eligibility for means-tested benefits. Therefore, it is crucial to seek independent financial advice and carefully consider the pros and cons before proceeding with an equity release mortgage.

Regulations and safeguards are in place to protect consumers in equity release transactions, including the requirement for mandatory financial advice and membership with the Equity Release Council, a trade body that sets industry standards and consumer protections.