Remortgaging – The basic concept

Remortgaging means kissing off good bye to the current mortgage deal and availing another one, of the same or the different lender. Some people think it is the practice of moving mortgage loan to some other lender. This is wrong because if your current lender is offering you a better deal, switching to that deal would also be remortgaging. This is very beneficial for the buyer especially if the early repayment fee of his current loan is less.

Remortgaging in Dubai

Dubai real estate is passing through a tough time. During the last two years, not even a single bank was ready to issue mortgage loans at lower rates of interest. This is because when Dubai real estate market collapsed, loan buyers made huge defaults, which increased the banks portfolio of non-performing loans. High interest rates of above 9% along with the strict procedures were hampering buyers to invest in Dubai properties. With now property prices recovering in all the areas of Dubai, banks are ready to lend at mortgage rates at lower than 5%.

In order to lure buyers to invest in Dubai real estate, banks have also introduced multiple mortgage products that are flexible and offer many favours to the buyers. Those buyers who financed properties at higher rates of interest are now considering remortgaging. This is because if they shift their mortgage, they can save much money.

Reasons for Remortgaging

Mortgage buyers normally go for remortgaging due to the following six reasons. If you having any one of the reason to switch to a new mortgage, this is the right time to practice it in Dubai.

1. If you are currently paying a variable rate on mortgage and you expect rise in interest rate in the near future again. Its better to remortgage with a fixed rate of interest.
2. If the existing bank has introduced more flexible mortgage deals in terms of over payment, underpayment, and early repayment fees, switching to other deals would be a wise idea.
3. If you feel home improvements can add value to the Dubai property in the current situation, consider using remortgage to release the equity and reinvest in another mortgage into the same property.
4. If repayment of the current loan and switching to another will decrease your monthly loan instalments, you should definitely go for remortgaging.
5. If your financial status has improved and previously due to bad credit profile you have been charged at a higher rate of interest, then you should remortgage to be charged at lower interest rate.

If your current mortgage is costing you much, this is the right time to think of remortgaging in Dubai.