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Think twice before remortgaging, mortgage holders warned
Thu, 02 Mar 2006
Mortgage holders who are considering trying to find a remortgage to release capital from their home are being urged to consider all the options before committing to a new loan.

Although there are some good remortgage offerings available, it may be better for some homeowners to use their savings first rather than repaying interest on a loan, suggests the editor of financial website Moneywise.

Emma-Lou Montgomery says personal loans could even be a better option, as this form of borrowing offers a shorter repayment term despite usually having a higher interest rate.

"As a first step though, decide whether you need to borrow at all," she advises consumers.

She says that the disadvantage of remortgaging is that people may end up borrowing money over a longer period of time than they would with a personal loan.

Ms Montgomery points out that if people have considerable savings, it may benefit them to use their savings rather than keeping them "for a rainy day".

However, remortgaging remains a popular way of releasing capital. Last year, remortgaging accounted for more than a third of all mortgages taken out in the UK, according to the Council of Mortgage Lenders .

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