REMORTGAGE EXAMPLES

Here are a couple of examples to give you an idea of what can be achieved by changing your mortgage to a new UK lender.

Remortgage to Pay Off Debts and get Cash Back

Say you bought a flat 5 years ago for £100,000 and after paying a 10% deposit of £10,000 you took out an interest only mortgage of £90,000 to complete the transaction.

Since your purchase, house prices have increased considerably in your area and now the flat is worth £150,000.

Thus you now have equity of £60,000 in the flat (up from the original £10,000), but still owe £90,000.

During the past couple of years you have increased the balance on you credit card so that you now owe £4,000. In addition your wife desperately needs a new car, which you expect will cost about £8,000.

If you remortgage you can take equity out of your flat to pay off your credit card and buy your wife a car. You can also get more cash back for anything else you might need.

If a new mortgage was taken out for £105,000 you would still have £45,000 equity in your flat and you would get £15,000 cash out.

The cash out would cover the £12,000 cost of buying your wife a car and paying off your credit card, which would leave you with a final cash amount of £3000.  You could use this for any remortgage costs or to spend on something else like a family holiday.

Remortgage for Lower Repayments to Save Money

Say you bought a house 10 years ago for £200,000 and after paying a 20% deposit of £40,000 you took out a repayment mortgage of £160,000 to complete the transaction.

Since your purchase, house prices have gradually increased and now the house is worth £300,000, but interest rates have dropped during the same period and you now feel that the interest your are paying is too high.

During the 10 years your repayments have paid off capital of £30,000 so now you only owe £130,000.

Therefore you now have equity of £170,000 in the house (up from the original £40,000).

Taking out a fixed rate mortgage for the same amount owed of £130,000, but with a different lender, means you can change the interest rate you are paying from your current lenders Standard Variable Rate of 7% to just 5% for the next 5 years.

This will reduce your monthly payment from £1190 to £1045, a saving of £145 per month.

It means you will save £8700 in mortgage repayments over the next 5 years!