There are multitudes of reasons one may decide to remortgage or refinance their loan. However, prior to actually making the move, you must understand the Remortgage Fees or Refinancing Fees that will be involved.
Moreover, one must evaluate the benefit of refinancing their loan versus just leaving it alone. For instance, the remortgage fees involved my out weigh any benefit you would gain by obtaining a lower interest rate. In many instances, it takes years paying a lower monthly mortgage payment to cover the total cost of the refinancing fees endured when remortgaging.
Also, if you have less than perfect credit your remortgage fees for a poor credit remortgage may be higher.
Possible fees that need to be considered include valuation fees. Although your property has already been valued, the new loan agency will want their own and updated valuation performed. An Appraisal is just one of the remortgage fees that will be encountered when beginning this process.
Your new financial institution wants to avoid situations of negative equity, meaning that the loan is worth more than the property. Reassurance of the value of the property will in turn secure your mortgage for both you and your new financial institution.
On the other hand, your former loan agency may charge early repayment fees. When you initially sign a contract for a loan, many times in the small print there will be a predetermined amount of time that you are required to keep the loan with said institution. If for some reason you decide to move the loan or refinance prior to this date, repayment penalties can incur. These are also included in your remortgage fees and can be substantial.
In addition, arrangement fees or initiation fees that are charge to create and maintain the loan. Moreover, remortgage fees also include higher lending charges (HLC). These charges are usually 1%-1.5% of the total loan and are based on Loan - To - Value (LTV). LTV is determined by the amount one borrows. If you borrow 100% of the value of the property then the LTV is 100%. However, if you borrow 75% of the value of the property then the LTV is 75%. Not only does the LTV affect the HLC, they also assist in determining the interest rate of the loan. The higher the LTV the higher the interest rate.
As one can see, there are a number of remortgage fees that may not be obvious. When choosing to remortgage, carefully consider your situation and ask questions. Refinancing can saved you money on your monthly mortgage payments. But you have to understand the how long it will take to recoup the cost of all of the remortgage fees with the saving on your mortgage payments.
If you are planning on moving soon then it may not be wise to refinance your home loan. An example would be if you remortgage your home loan and you will save $50 a month on your mortgage payments. If you refinancing fees are $1,800, it would take three years to recoup the costs of the remortgage fees with the $50 savings on the monthly mortgage payments. You would have to live in your home more than three years for refinancing would be right for you.
You can get a good estimate what your refinancing fees will be from lenders if you decide you want to refinance your home loan. But do get more than one estimate because remortgage fees will vary in cost from lender to lender.
For more free advice on remortgage-advice-online.com/remortgage-fees-know-your-mortgage-refinance-fees Remortgage Fees, visit us at Remortgage Advice Online where we provide that and much more in regards to remortgaging your home loan. You can also find more information if your have less than perfect credit at poor-credit-remortgage.com Poor Credit Remortgage
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