Remortgage is the process of freeing up extra equity from your immovable property. Equity is the amount when your total debt burden (taken against the particular property) is deducted from the market value of the property. You can remortgage your home with the existing lender or go for a new one. There are several situations when remortgage is profitable option. Different people have different reasons for remortgages. Some common reasons are:
1. Taking the advantage of interest rate fall
With the help of remortgage you can pay off your higher rate loan burden and have some savings too.
2. Credit score improvement
Too much debt burden may lead towards bad credit. Once you go for Bad credit mortgage remortgage, your monthly outgoing is controlled. Hence you can easily maintain regularity in repayment and increase your credit status.
3. Debt consolidation
Debt consolidation helps
you to pile up your existing unsecured loans and credit card
bills and pay off with a lower rate loan. As bad credit remortgage is backed by residential property, they charge a lower rate and make your consolidation process easier.
4. Reaping dividends from increased equity
The equity of your home increases due to factors like increase in market value, renovation and repayment of the loans against the property. In such cases, remortgage helps you to raise some extra bucks from your home.
Remortgage is not profitable under following instances
* Longer repayment period - the repayment tenure of Bad credit mortgage remortgage may tend up to 25 years. The monthly outgoing might be lower, but when you sum up the total outgoing, you may find an extra payment.
* Negative equity or interest rate rise - Both negative equity and hike in bank rate block your road to cash benefits from remortgage. If you are neck dip in debt and stuck by the above two factors, selling your home immediately is a better option.
