A remortgage loan is a type of transaction where the homeowner chooses to switch mortgage lenders, but they will stay in the same property as in the first mortgage.

People choose remortgage when they want to save on repayments or if they want an injection of extra funds.

Remortgages generally fall into three categories: fixed rate, discounted rate, and variable rate. With a fixed rate, your payments will be set for a certain length of time. During this period, your payment rate will not fluctuate up or down, but it will stay at the same level. Once the predetermined fixed-rate period is over, the loan will then adopt a variable rate. A discounted rate remortgage is like a variable rate mortgage, but it differs in that the lender offers you a discount on your interest rate. Thus, your payments will be reduced for a certain length of time, but your payments are still influenced by the fluctuations in interest rates. A discounted rate remortgage becomes a variable rate remortgage once the discounted period is over.

A variable rate remortgage makes it fairly difficult to predict what your monthly payments will be since the interest rate fluctuations will determine the amount you have to pay each month.

This entry was posted on Friday, June 19th, 2009 at 1:38 pm and is filed under Mortgage, Mortgage Rates, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.