What does remortgaging mean in the Uk?
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In simple terms, when you have a mortgage you’re committed to a specific plan to pay X per month over a certain period of time.
Remortgaging is moving to another plan where you can change that plan to pay Y per month instead over a different period of time.
When you move to that different plan, the new provider “buys” the remaining debt from the previous provider, and you can add to that debt if you want as part of the exchange, so you effectively have a bigger mortgage but have a lump sum for house renovations or whatever.
If it’s similar to a re-fi in the US, it’s taking out a mortgage for the amount that you currently owe on your house. You use the new mortgage to pay off the original one. You typically do this because the interest rates are lower or you want lower payments by taking your remaining balance and spreading it out over 30 years (instead of the time remaining in your current mortgage).
An odd way of thinking about it, but you’re selling the house to yourself.
When you bought the house it was 100k, now you only owe 50k.
You buy the house again for >=50k, with a different payment plan.
Maybe for a better interest rate to help save money in the long run. Maybe for lower payments to help save money for the time being.
Sometimes, you can buy that house from yourself for more than you owe, like 60k. The first 50k will cover the existing loan, and the extra 10k comes back to you to cover a large expense.
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