How to Find the Right Remortgage For You
For many in Britain, the thought of remortgaging a home is enough to send them running for the hills. They envision seas of confusing numbers, walls of unintelligible financial jargon, and mountains of paperwork to be signed.
Fortunately, however, the UK mortgage industry is now more consumer-friendly than ever, and an authorized adviser can show you how to find the right remortgage for you. The booming UK housing market has crowded the field of mortgage lenders - banks, credit unions and housing societies are all competing for those looking to remortgage.
This, along with recent Financial Services Authority (FSA) regulation on the UK mortgage system, equates to greater choice and transparency for Britons wanting to remortgage their home. But wait, how does more choice make it simpler to find the right mortgage for you? While utter simplicity is a bit much to hope for in a British mortgage, lenders are now legally bound to present you with summarized information about different mortgages. This allows you to compare and contrast.
With this in mind, the consumer should first arm himself with some basic knowledge of the different kinds of mortgages available in the United Kingdom . By understanding the whys and hows of UK remortgage you can find the right remortgage for you. While British mortgage lenders are famous (or infamous) for their tortuous method of calculating rates, there are four basic types of remortgage - fixed, flexible, capped and discounted.
Available Mortgage Types
Fixed rate mortgages set the interest that the borrower pays. The lending institution typically establishes the rate for a period of two to five years. These are a good choice for those on a fixed income who want a predictable monthly mortgage payment.
Flexible mortgages are the opposite of this - they permit the borrower to pay varying rates without penalty. This kind of mortgage appeals to individuals with variable income, and also allows for the mortgage to be paid off early.
Capped mortgages set a limit on the rates paid by the borrower. If interest rates are up, the capped rate prevents the lender from increasing the monthly mortgage payment. If they drop, however, the payments are also reduced.
Discounted mortgages offer a rate lowered from the standard variable rate. This discount only lasts for an initial temporary period, after which rate fluctuations will affect the monthly mortgage fee.
Comparing the benefits and drawbacks of these mortgage types with your borrowing needs is how to best find the right remortgage for you.