When it comes to getting a mortgage on our so-called dream home we soon come to realise after the papers have been filed and the terms finalized that we may have made a pretty bad mistake. It is always the same sad story you will hear from many other people around the country and the world. We shopped around all of the lending institutions that service our area. We did this with the best possible intentions in mind: low interest! A low interest rate means low monthly payments. We smile and hope that the rate they printed or told us was a misprint and they wouldn’t catch us. The final fault lies with us as in most instances we fail to get out a magnifying glass to read the fine FINE print at the bottom of the loan agreement. We also fail to locate a solicitor to read over the documentation so regardless how ripped off we feel there is no one to blame but ourselves.

Many of us fail to realise that our interest rate may be fixed and it may be low but that our payments only span 3, 5 or 10 years but the math does not work out. We hope they are using some “new math” that we have not been let in on but, as it turns out, we just failed to connect the dots that when the mortgage term comes to an end we are left with a very large final payment. For most of us this does not matter much as we can remortgage and get another really good deal. There is one small issue no one ever imagines: unemployment. The world is going through a recession and people are losing their jobs and when this happens they obviously can’t pay off these increased payments. The house winds up being repossessed and sold to make the money back. Unfortunately the housing market is also in the gutter so they aren’t selling.

All of this sounds bad, right? Rightfully so but believe it or not this has created a great opportunity for those of us who are still stable in our job. We can still pay our monthly fees and do not have negative equity in our homes but we see the market changing and realise that the rate we have is not the greatest. We don’t want to continue paying insane monthly payments or interest rates based on a great market. The banks are scurrying now to help people out of their holes so their interest rates have gotten better and they have been adding more products and services to their loan arrangements to entice homeowners to shop with them.

Remortgaging in the United Kingdom is becoming a lot simpler now thanks to the economic struggle. We are able to shake our financial fist at our current lender and say “No more!” to the high interest rates and no more to the insane monthly payments. We can take our current mortgage to another company that will help to pay off the marker of the old one while giving us a new rate with lower interest, This is even more beneficial to those of us who have fixed rate mortgage loans because with the interest rates decreasing we can’t reap the rewards and are forced to stay at the same high rates. The same applies if you happen to have a variable interest rate mortgage because your lender may increase their rates to help pull themselves out of a financial hole and next thing you know your home equity is not in the negative region. You want to save on interest in order to reduce your personal burden.

When you remortgage you are paying off your old mortgage loan by using a new loan from the new mortgage lender. You will forever be free of that lender but now beholden to the new one. Be certain to talk to financial advisers and planners, research on the internet and ask bankers about rate information. Watch the financial news or pick up a paper or magazine on the subject. It pays to educate yourself on what all these trends mean (or don’t mean) so you can make a better decision. You don’t want to be caught in a situation where you get your loan paid off, remortgage then come to find out a year down the road that the company you just went with closes and gets bought out by someone else. In this situation you hope you will be safe but usually they just revisit all the loans, call in markers or change your rates.

When you remortgage your home you are entering in what the lending institutions call a “secured loan”. The loan is secured because you are using your current assets to go against the loan to cover it in case you default on it. Your home is now the collateral for the loan. They will give you up to the value of your home (in some circumstances you may be given a percentage above 100%). Lenders usually don’t have a problem giving you a loan based on the value of your home in a good market.

At the time you are remortgaging you should be very careful because the world is forever changing as is the market. I said this earlier but it should be repeated because of its importance. Read everything that you are given before you sign away your life. Lending institutions have a nasty habit of including things in contracts to eventually hurt you – like early repayment fees, hidden costs, yearly interest rate increases and the like. If you are the least bit careless in your finances as far as your property is concerned you could find yourself being without a home.