What does Re-mortgage mean?

Re-mortgaging practically involves moving from one lender to the other, most of the times simply because you find better lending terms with a new mortgagor. You have to be very careful though, because many times even if you find that the new lender offers you much lower interest rates which is the reason you switch lenders, the arrangement fees you will have to pay may be so high, in the end you will be saving very little money.

You have to take into consideration all the terms and the conditions and carefully make all the calculations to see whether it is indeed advantageous to switch lender. Moreover, especially if the present mortgage is a fixed rate one or a discounted rate one, most probably for finishing off your loan earlier or for switching to another lender you will have to pay early redemption charges.

For example, if you have a fixed rate mortgage with a 25 year term, but you switch lender/pay it off earlier, say within the first 5 years, you may be charged many times 5% of the total, which means the greater your loan, the higher redemption charges you will pay. Consequently, the early redemption charges you pay to your present lender and the arrangement fees your new lender will charge are all costs which’s value may be a significant sum, and you definitely need to take these charges into calculation as well, when making such an important decision.