What does re-mortgaging mean

[newbie]

We are looking into ways of raising finance to carry out various BIG repairs to our house. Someone has suggested to us re-mortgaging but we do not know what exactly that means and what the financial implications are of doing that. Any help appreciated.

[Fitzer]

Re-mortgaging is based on the assumption that your house is worth more than your current mortgage by a fair amount. It simply involves applying for a larger mortgage either with your current lender or a new one. The financial implications are the same as those involved in any mortgage application, can you afford the repayments, is the repayment period suitable (will it take you past retirement etc), do you have sufficient equity in the property?

[Scarlett]

At the moment your house is worth x amount, and you have to pay �x for x years until it is paid off. If you remortgage (ie- get a new mortgage) you can find a better deal with another lender, maybe pay less per month, maybe borrow MORE (ie- make what you owe your lender bigger) and use the extra money to do up the house. Your lender will be happy to give you more money providing you are spending it on the house, as it is in their interest!!

Eg: I owe �73,000. I want to spend �20,000 on home improvements. So I remortgage with another lender, at a better lower rate. I end up owing �93,000, but it's okay cos my house is now worth �190,000! Cos of the better interest rate I am still paying the same amount per month. YOu could also extend the term, so rather than paying over 20 years you could make it 30, thereby reducing your monthly payments even more.

It does cost you money to remortgage, but some lenders will pay your fees for you. Best thing is to go to an independent financial advisor or mortgage broker (NOT one that works for an estate agent) and get the lowest rate you can!