What is the difference between remortgaging and refinancing?

Definitions

remortgaging

- Referring to the process of switching from one mortgage lender to another.

- Talking about the act of taking out a new mortgage on a property that is already mortgaged.

- Describing the process of renegotiating the terms of an existing mortgage with the same lender or a different one.

refinancing

- Referring to the process of replacing an existing loan with a new one, often with more favorable terms.

- Talking about the act of taking out a new loan to pay off an existing one.

- Describing the process of restructuring debt to reduce monthly payments or interest rates.

List of Similarities

• 1. Both involve taking out a new loan or mortgage.
• 2. Both can result in lower interest rates or monthly payments.
• 3. Both can be used to restructure debt.
• 4. Both require going through a financial institution or lender.
• 5. Both can be used to access equity in a property.

What is the difference?

• 1. Purpose: Remortgaging specifically refers to changing mortgage lenders or renegotiating terms, while refinancing can refer to any type of loan replacement.
• 2. Collateral: Remortgaging involves using a property as collateral, while refinancing can involve various types of collateral or no collateral at all.
• 3. Costs: Remortgaging may involve additional fees and costs, such as legal fees and valuation fees, while refinancing may have fewer fees associated with it.
• 4. Timing: Remortgaging typically occurs at the end of a mortgage term, while refinancing can occur at any time during a loan term.
• 5. Flexibility: Refinancing can offer more flexibility in terms of loan amount, repayment period, and interest rates than remortgaging.

📌

Remember this!

Remortgaging and refinancing both involve taking out a new loan or mortgage to replace an existing one. However, remortgaging specifically refers to changing mortgage lenders or renegotiating terms, while refinancing can refer to any type of loan replacement. Additionally, remortgaging involves using a property as collateral and may have additional fees, while refinancing can offer more flexibility in terms of loan amount, repayment period, and interest rates.