What does it mean to remortgage your house?

To remortgage means to pay off an existing mortgage with a new mortgage from a different lender. A remortgage is different than a refinance, which replaces an existing mortgage with a new mortgage from the same lender. However, these terms are often used interchangeably.

Change the mortgage terms

A common reason to remortgage is to change the terms of the loan. A lower interest rate will reduce monthly mortgage payments, which will also reduce the borrower's monthly expenses. A remortgage with a shorter loan period, such as 15 years instead of 30 years, will allow the mortgage to be paid off more quickly and save thousands of pounds over the life of the loan.

Use the home equity

If a home has increased in value, a remortgage can allow the equity to be used to consolidate other debt that carries a higher interest rate, such as car loans or credit card debt. Equity can also be used to pay for university expenses, weddings, home improvements or other large expenditures.

The remortgage process

The process for remortgaging is similar to the process for obtaining the original mortgage on a home purchase. The lender will require that the borrower have a good credit rating, proof of steady income and a low debt-to-income ratio. A property appraisal is usually required.

Cite this Article A tool to create a citation to reference this article Cite this Article

About the Author

After 15 years of business experience, Deborah Rose began writing about business and economics in 2007. She ran the blog Main Street Observer and continues to contribute on numerous economics blogs, as well. Rose has an Associate of Arts in pre-law from Daley College in Chicago and studied business management at Our Lady of the Lake University in San Antonio.

Try our awesome promobar!