Repayment Remortgages

Repayment remortgages are the most common type around, and the type most people opt for. As the name may suggest, a repayment remortgage is one in which the payments you make each month go towards paying off the funds that you've borrowed for your property, as well as any interest that you've incurred. Remortgage Quotes will be more expensive than their interest only remortgage counterparts.

Capital

When you take out a mortgage, you borrow money from a lender to purchase a property, and at some point pay this back to the lender along with any interest. Similarly, with a remortgage, you take another mortgage on the same property, and use the funds from this new one to pay off the existing one in full - you are then left with the debt for the newer mortgage, which you will therefore also pay back.

The payments that you make towards your mortgage or remortgage each month are made up partly of the actual lending for the property, and partly interest chargeable on this as part of the remortgage deal. The payments that you make therefore work towards clearing the debt, reducing the amount that you owe each time you make a payment.

Alternatives

The fundamental alternative to a repayment remortgage is an interest only remortgage, through which your monthly payments contribute only to the interest that you owe on the lending. You pay the actual capital used to purchase the property back during an agreed term, but arrange these funds separately rather than making incremental contributions towards them each month. This type of remortgage is often used by property developers and buy-to-let borrowers, who use funds gained from properties increasing in value to pay off their mortgage debts.

Straightforward

For most people, a repayment remortgage is both the most sensible option, and the easiest to understand and manage. You have the peace of mind of knowing that each time you make a payment, you are reducing your remortgage debt and working towards the property being yours outright.

Options

There are many different types of repayment remortgage deal available on the market today, and it definitely pays to shop around. Use online tools such as remortgage comparison and calculators to work out what the impact of a remortgage will be on your finances, and make sure it's going to be worth it before going ahead.

You can also use the services of independent remortgage brokers to find you the best available remortgage deals from the companies they represent. These are particularly useful if your circumstances are not standard, for example if you have had bad credit.