Remortgage Types

There are literally hundreds of lenders and specialist companies offering remortgages to the UK market, and choosing the right one can be difficult.

Sorting through the different remortgage types should make it clearer for UK borrowers to choose the right type of remortgage.

Whatever type of remortgage you are searching for, the following guides should be able to provide you with more information about various types of remortgage. The right type of remortgage for you will depend on your individual situation.

There are numerous types of remortgage on the market, including:
fixed rate remortgages,
capped rate remortgages,
collared rate remortgages,
standard variable rate remortgages (svr remortgages),
discounted rate remortgages,
tracker remortgages,
bad credit remortgages (poor credit remortgages),
flexible remortgages,
cash back remortgages,
offset remortgages,
long term remortgages and
bad credit remortgages.
Fixed-rate Remortgage

A fixed-rate remortgage is a loan whereby the remortgage rate is fixed at a set level of interest. Fixed-rate remortgages can run for two, three, five, ten or even twenty-five years. During the fixed-rate period, however many times the Bank of England changes interest rates, the rate of repayment on the remortgage will remain the same. When the fixed-rate remortgage comes to an end, the borrower will automatically pay the lender’s standard variable rate, if they have not remortgaged again.

Fixed-rate remortgages have advantages and disadvantages. For instance, if interest rates climb, the borrower who has remortgages to a fixed-rate deal will be protected. But, if interest rates fall, the borrower will not be able to take advantage of falling rates.
Capped Rate Remortgage

Capped Rate Remortgages are similar to Fixed-rate remortgages in many ways. When choosing a capped rate remortgage, the borrower will pay a rate of interest directly linked to the lender Standard variable rate, but this will be ‘capped’ at a maximum. Therefore, if interest rates increase, so will repayments on the remortgage but only up to the agreed capped level. At this point, if the SVR continues to climb, the borrower will only pay up to the accepted maximum.

Capped rate remortgages, like all remortgage types, have pros and cons. For instance, they offer borrowers protection if the SVR exceeds a certain level. Capped rate remortgages typically last for a fixed period, although some can last for the life of the remortgage. Any decreases in lender SVR will also be passed on the borrower. Some capped rate remortgages have a discounted introductory period and can become more expensive when this expires.
Capped Collared Rate Remortgage

Capped Collared Rate Remortgages are similar to capped rate remortgages described above. However, in the case of a collared rate remortgage, the interest rate applied to your mortgage loan is collared, meaning that the rate does not fall below a set level. This means that when interest rates fall, the rate of repayment on this type of remortgage can only fall to a certain level. How long the collar and cap are in place for will depend on the remortgage.
Flexible Repayment Remortgage

A flexible remortgage allows the borrower to both underpay and overpay on their remortgage loan. This is excellent because it allows the borrower space and freedom. Some remortgages of this type even allow the borrower to take repayment breaks and not make any remortgage repayments at all for a set period.

Flexible repayment remortgages sound like a great remortgage idea in theory, but there are advantages and disadvantages as with any type of mortgage product. For instance, remortgages with flexibility may not be as competitive as other types of remortgage.
Standard Variable Rate Remortgage (SVR Remortgages)

Standard Variable Rate remortgages are set at the SVR charged by the lender to provide the borrower with a remortgage loan. Lender SVR varies wildly, but will usually be a couple of per cent higher than the Bank of England base rate, and move in tandem with any changes when the Monetary Policy Committee decides on the level of interest rates each month.

Standard Variable Rate remortgages are not generally the choice of financial services experts, because they are typically set at a higher rate. However, with this type of remortgage, the repayments due can go up or down relatively quickly.
Discounted Rate Remortgage

Discounted Rate Remortgages are the same as standard variable rate remortgages, except they are set at an accepted discount for an introductory period. For instance, the discounted rate of a remortgage might be 2% lower than lender SVR for a fixed time. When lender SVR goes up or down, so too do the repayments (with their discount) on this type of remortgage.
Tracker Remortgage

Tracker remortgages have a fixed rate of interest, usually set slightly above Bank of England base rate. In most cases, this type of remortgage has rates that are lower than lender SVR. When the Bank of England increases or decreases base rate, the monthly repayments on this type of remortgage will go up or down, regardless of whether the lender changes their SVR or not. Tracker remortgages are a popular type of remortgage loan.
Cashback Remortgage

A cashback remortgage is not a complete type of remortgage, but it bears inclusion because it is often applied to remortgages as a way for lenders to attract customers. Cash-back remortgages provide the borrower with a lump sum in cash when their remortgage has been accepted and completed.

Depending on the level of the cashback remortgage, the value provided to the borrower can vary considerably. The cash raised by a cashback remortgage can be especially useful when a borrower is remortgaging, particularly in providing a breathing space if repayments are more expensive.
Off Set Remortgage

Like offset mortgages, offset remortgage loans are linked to a savings account and can reduce the level of interest paid. The interest that would be earned on savings is used to reduce the balance owed on the mortgage.
Long term remortgage

Long term remortgages are a niche mortgage product that refers to stretching mortgage repayments out over an extended period of time, usually to reduce the level of monthly repayments. Long term remortgages may contain certain aspects of the mortgage types listed above, and only some borrowers will be eligible for this type of remortgage.
Bad Credit Remortgage......................

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