A remortgage is exactly as name suggests, taking out a new mortgage and repaying your existing one in order to realise equity and sometimes to reduce monthly payments.

Basically, a remortgage is when you transfer your existing mortgage agreement to another lender. A remortgage will mean that new lending company will pay old provider balance of amount outstanding and you will continue making your payments to new lending company.

Many people do not realise that they can simply pay off their current mortgage and take out a new one. By remortgaging your home, you could save significant amounts on your monthly payments.

Review your current mortgage. If you feel you are paying excessive rates of interest, compared to other lenders then a remortgage may save on your monthly payments. Alternatively, you may be looking for a way to finance an extension or purchase a new car, you could seek to increase your mortgage and take extra sum as cash.

A remortgage can be used for purpose of gaining lower interest rates on your mortgage or raising finance through releasing equity. Releasing equity is a good way of raising additional finance. If your home has positive equity - its market value is greater than outstanding mortgage - you can increase size of your mortgage.

A remortgage is a great way of saving money, as it is likely to lower your mortgage interest rates. A mortgage is also one of cheapest forms of loans around, so if you're looking to raise finance, it makes sense to remortgage your home.

There are various reasons why someone would remortgage. Quite often it is just a cost saving exercise to reduce monthly payment, although increasingly it is seen as a way of consolidating debts and reducing overall household outgoings each month.

You may already be familiar with a traditional loan product. These are usually based on your credit rating and your ability to repay loan. The lender will review your past tax returns, credit score, as well as your salary. They may also factor in your income potential in near future, if you are currently enrolled in a higher education program or up for a promotion soon. The main benefit of such a loan is that you have little at stake if you fail to repay loan. They may have ability to garnish your wages or hurt your credit rating, but you will be able to keep your home. The main disadvantage to this type of loan is that you can expect to pay a much higher interest rate than that of a home equity loan. You may also find yourself unable to take out as much as you would with a HELOC.