cash back
remortgage
Re-mortgaging couldn’t be simpler these days and
the one of
the main
purposes of
re-mortgaging
is to find a
better deal
than your
current
mortgage.
People often
re-mortgage
just to
obtain a
lower rate
of interest;
however,
re-mortgages
can also be
used for
home
improvements,
debt
consolidation
or even
paying for a
wedding. The
re-mortgage
process
simply pays
off your
existing
lender with
the
outstanding
mortgage
balance
which will
then be
followed by
you
borrowing
either the
same amount
or larger
depending on
whether you
will be
releasing
some equity
in your
property.
There are
various
types of
re-mortgage
products on
offer by
lenders. A
cashback
re-mortgage
is one type
of this
financial
product. The
main
difference
between this
type of
re-mortgage
and a
standard
re-mortgage
is that you
are entitled
to receive a
lump sum up
front as
well as the
agreed
re-mortgage
amount.
These cash
back
re-mortgages
are usually
available
within the
lenders
standard
variable
rate (SVR)
product.
However,
some lenders
also offer
the cashback
facility on
tracker
rates as
well.
Depending on
lender, the
amount of
cashback
differs.
Lenders will
typically be
able to
offer the
ability to
borrow a
minimum of
5% of the
re-mortgage
amount as a
cashback
option.
Therefore,
as an
example if
you were to
borrow
£200,000.00
mortgage,
you would
receive an
amount of
£10,000.00
as cashback
upon
completion.
However, you
should check
the finer
details of
the cashback
facility as
some lenders
will impose
a maximum
amount of
cashback
that they
are willing
to pay out.
Some lenders
will also
agree to pay
for any
arrangement
fees that
will
incurred as
part of the
re-mortgage
process.
This can be
incorporated
as part of
the
cash-back
option as
well as
receiving a
percentage
of the
mortgage
amount.
The cashback
facility is
useful to
you if you
want to
purchase new
furniture
when
re-mortgaging
and moving
home or if
you want to
use the
funds to pay
off any
outstanding
debts that
you have
accumulated.
This is
quite a
cheap way of
repaying
debts
although you
could
potentially
have the
debt for a
longer
period of
time.
Using a
cashback
re-mortgage
does come
with some
drawbacks,
the interest
rate that
will be
payable is
usually the
SVR,
therefore,
if the Bank
of England
base rate
increases,
the lenders
SVR will
also be
subject to
change in
accordance
with this.
If the rate
changes,
your monthly
mortgage
payments
will also
change,
which is
something
you should
be aware of.
Also, as
part of this
product
offers you
cashback,
the lender
will want
you to
tie-in to
the
particular
mortgage
product.
This means
that they
can impose
penalties
should you
repay this
mortgage
earlier than
the agreed
tie-in
period. They
will charge
you “Early
Repayment
Penalties” (ERP)
which will
usually run
for a longer
period than
the standard
ERP periods.
The lender
will also
require that
you repay
the cashback
amount
should you
redeem the
current
mortgage and
switch
mortgage
provider
earlier than
the agreed
period.
Re-mortgaging
has become
big business
for lenders
and now
provides you
with a very
competitive
market. This
is
beneficial
to you as it
mean the
interest
rates on
these
mortgages
are also
competitive.
It’s worth
checking
with various
lenders in
order to get
the best
deal on
offer. Most
lenders have
internet
sites that
can be
checked to
compare
lender rates
and it’s
through the
internet
that you
will also be
able to
apply to
re-mortgage.
Lenders
remain open
to branch
and
telephone
applications,
however the
majority of
lenders are
now seeing
increasing
numbers of
online
applications.
This not
only saves
them time
and money
but it’s
also a
convenient
method for
you too.
Along with
the
re-mortgage
product
itself, you
can also
purchase a
mortgage
protection
policy. This
works in
much the
same way as
an insurance
policy, for
a monthly
fee you will
be entitled
to have your
monthly
mortgage
repayments
made should
you lose
your job
through not
fault of
your own or
become ill.
There are
exclusions
to this type
of policy
and all
terms and
conditions
should be
read fully
before
agreeing to
purchase the
policy.
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