How to Remortgage: A Step by Step Guide

If you want to know how to remortgage, you are not alone. Remortgaging a home is just another term for refinancing the mortgage. In some cases, remortgaging a home will provide cash back to the homeowner, which can be used to cover debt or put back into the home. Refinancing the home can also be used to consolidate debt into one payment. Learn how to remortgage with this step-by-step guide.

 

Step One: Look at the Terms of Your Current Loan

It is important to look at the terms of your current loan before refinancing because there may be a fee or penalty for getting out of the original mortgage early. You shouldn’t refinance if the process won’t save you money in the long run, and if the fees are too much for you to handle, you are better off staying in the current mortgage.

Step Two: Shop Around and Locate a Lender

 

Nothing says you have to stay with the current lender when you refinance your home. However, starting with your lender may be a good idea because you may use it as leverage. If you’ve had a good payment record and been a loyal customer, they are not going to want to see you go elsewhere for your loan. It is important to check several lenders to find out who can give you the best deal, but you don’t want to run your credit excessively in the process.

Step Three: Choose a Loan Type


Once you have decided on the lender, you will need to choose a loan type. If you want to get cash out of the deal, you will need to get a home equity line of credit as the equity in your home will be the cash from the loan. If you are just looking to get a lower interest rate, a 15 or 30 year fixed mortgage may not be a bad option. Most people refinance to get out of an adjustable rate mortgage, or ARM. 


Step Four: Close the Loan


After you have chosen the loan type, it will be time to fill out the necessary paperwork and go through a process similar to when you originally purchased the home. You will have to close on the loan because this loan will pay off and take the place of your original mortgage. You will have to pay closing costs all over again, so it is very important to do your research ahead of time to determine if the cost of the new loan is worth the money savings in the long run. 

 

If you plan on selling the home within a few years after the remortgage, it will not pay for itself in benefits. If you are not going to be in the home long term, the cost of refinancing the loan will only hurt the financial situation.

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