Remortgage | Remortgaging

A mortgage is the purported conveyance of property as security for the payment of a debt. The condition of the instrument is that, if the debt is paid according to the terms of the note, the conveyance is then void. Both real and personal property may be mortgaged.

Real estate mortgages take the form of a deed. The borrower is called the mortgagor and the lender, the mortgagee. Mortgages must be in writing, whatever the property secured. In order to protect purchasers of a mortgaged property, mortgages must be recorded within prescribed time limits. Real estate mortgage loans are usually obtained from banks or savings and loan associations, but they are also made by private parties. Repayment of real estate mortgage loans is commonly made over a long term, such as 20 years or more.

In the event of default on the loan, the mortgagee may institute foreclosure proceedings, which in this case call for the public sale of the property in order to satisfy the debt.

Under some circumstances, more than one mortgage may be placed on a property at a given time. A first mortgage has a superior claim both as to interest income and as to principal. A second or junior mortgage receives nothing from the proceeds of the sale of a mortgaged property until the first mortgage obligation has been completely satisfied.

Remortgaging is a process that replaces an existing mortgage loan with a new loan from a different lender. The new lender repays the existing mortgage debt to the original loan provider. The borrower is then left with just one mortgage loan, repayable to the new lender.

There are various reasons why borrowers consider remortgaging their mortgaged properties. Often, the purpose involves saving money. Securing a new mortgage at a lower interest rate than is afforded by the existing loan may reduce the borrower's monthly repayments. Obtaining a lower rate may also reduce the total amount of money the borrower must repay over the full life of the loan.

Remortgaging process is fairly simple just like obtaining any other mortgage loan. The new lender reviews the borrower's application and asks for certain related paperwork. Remortgage paperwork typically includes proof of income, debts, and expenditures.