Guide to remortgaging
Remortgaging may work best for homeowners who’ve seen an increase in market value since they bought their house and want to make new financial plans.
In this situation, your property is – in theory – worth more than when you bought it, combining your mortgage repayments to date and the estimated increase in value.
The equity you hold in your property is its current value minus your outstanding mortgage. This equity value can be used to calculate your loan-to-value rate (LTV), which is given as a percentage. A lower LTV rate can be a great way to secure lower interest rates on your remortgage deal. This may mean:
- Lower monthly instalments going forward
- Money saved on paying interest over the term of your mortgage.
The alternative is to borrow more money than what you currently owe against the value of your home. You’ll receive the difference as a lump sum in your bank account to use for your chosen purpose.
For more information, read our guide to remortgaging to release equity in your home.