Refinancing your property: What does it mean?
Refinancing your property: What does it mean?
What is involved in the process and is this something to consider?
First things first, remortgaging and refinancing, are the same thing. But what does it mean?
Essentially, the process involves taking out a new mortgage on your property. Hence, the redemption of one mortgage, and the grant of the new loan. The property serves as the lender’s security for the loan as the loan agreement allows the lender to have a charge over the borrower’s property.
Refinancing your mortgage aids those individuals that wish to keep ownership and interest of the property, whilst receiving a cash injection at the same time. This is a tool for unlocking equity that is tied up in assets that you already own! Individuals will choose to refinance in order to reinvest, obtain growth, boost capital or settle liabilities.
However, it is crucial that you obtain professional legal advice from property specialists in order to ascertain the correct steps and potential implications that will occur, on a case-by-case basis.
Some key considerations include:
- Assessing your current loan – such as, what are the key terms, and how much equity is available.
It is vital to review the interest rates, and repayment structures as this makes all the difference. Some lenders will want early repayment fees to be settled in the first instance, and the cost varies.
- Legal considerations- for example, the property title and the new loan agreement involving covenants, interest rates, and repayment schedules. There will be new terms to agree between the parties, therefore, it is essential that you are fully aware of all terms and conditions.
- Financial review – such as any costs associated with the process of refinancing, and cash flow planning.
By carefully considering these factors, you can navigate the refinancing landscape with confidence.
Obtaining specialist advice ensures that your property continues to support your success.
Here at Tolhurst Fisher LLP we have a dedicated Residential and Commercial Property team who are specialists within the dynamic realm of refinancing, ensuring that you are supported from the very beginning, through to successful completion.
If you would like to discuss refinancing further, please contact Naska Balisani in our Commercial Property department, who will be delighted to assist.
Author: Naska Balisani
