Refinancing means replacing your existing mortgage for a new mortgage with a different lender. You switch on from one lender to another just because the new lender offers you a better deal to raise some money or to pay a lower interest rate.

Refinancing can be used for following purpose –

Ø Debt Consolidation – Refinance offers you with an opportunity to consolidate your existing debts into one thus you will be accountable to only one creditor who will be the new lender.

Ø Home Improvement – You can release your home’s equity by refinancing. It makes sense to refinance because the interest rates offered by the new lender are very low compared with many unsecured personal loans and credit card rates.

Ø Save Money – Refinancing can help you save that extra money you were paying to the previous lender in terms of higher rate of interest.

By refinancing you can borrow from £25,000 up to £500,000, depending on the value of your property.
Refinancing helps you to get a bigger loan at lower interest rates that will help you clear up debts and save up on interests. Refinancing provides an opportunity to shift from the current rigid mortgage plan to a flexible and better plan.
If you plan to Remortgage, the first step is to know what is your existing mortgage repayment terms. Any early repayment charges that you may face might make it not worth remortgaging right now. So, you need to know what kind of mortgage you already have. You must be able to answer these questions:
Are you in a special rate deal – if so for how long?
If you are no longer paying a special rate, are you in an overhang period?
What penalty payment, if any, will be required to move your mortgage?
After analyzing you current mortgage status, you can proceed forward with your decision to refinance or not. If you wish to refinance then you may be interested in a Straight Refinance for better rate or refinance to raise capital.
The next step is to search for refinance offers available in the market. To get the best deal you need to make some efforts. Shop around; approach the banks you have been dealing at present or in the past and collect the quotes offered by them. You can also look for online lenders; sometime they provide you with better deals. So take your time and shop around, these efforts will definitely pay you in future saving your hard earned money.
Last step involves applying for the loan, compare the various quotes and look for the one that suits your pocket and meet your expectations in the best possible manner.
A refinance for a better rate can be an easy decision, but, as in any mortgage, you should make sure that you are aware of ALL the costs involved such as Set-up costs, Ongoing interest charges and any changes and redemption charges on your old mortgage and your new one.