Can I Refinance My First Mortgage Only?

Many people choose the option of refinancing their mortgage when considering making home improvements or freeing up capital from the equity held by the house for other projects. This can be a cost effective way of raising the capital needed, as the interest rate is usually very much lower than that of a separate loan taken out or secured against the property.

What is refinancing?
Refinancing is not a loan in addition to your mortgage; rather it takes the place of the mortgage loan giving you additional funds to enable you to do what you are proposing. This can also be a great way to reduce the amount of mortgage you were paying initially especially when interest rates come down. Many people have just one mortgage but some people have chosen to borrow more and have an additional second mortgage.

Consolidating debt
By refinancing your mortgage, it is entirely possible to consolidate any other debts you may have to make one easy, and often lower, payment per month. The extra money you can obtain via refinancing cal allows you to upgrade elements of the house, for example adding new windows, doors or add a garage. Although the extra money obtained does not have to pay for home improvements, unless it was a stipulation of the refinancing, rather it can pay off other debts or go towards buying a new car.

Where can I get a refinance deal?
The best advice is to get quotes from several financial lenders, do not just take the quote offered by your current lender. This is not disloyalty; it is getting the best deal for you and very often this can be obtained elsewhere. If in any doubt, always get specialist advice from a broker as they will have access to different deals from different lenders and they can also advise the best options. You can find brokers online and in the high street. There is never any obligation after they have provided a quote so it is worthwhile picking their brains.

What if I have more than one mortgage?
There may be the rare occasion when you have two mortgages on your home. So what happens if you just want to refinance one of the mortgages, let’s say the first one? Generally you can do that but you will need to get the agreement of the second mortgagor. This is because when you have two mortgages, the first mortgage is the primary mortgage and that is the mortgage that receives payment first if a house is sold or repossessed. Once the first mortgage was paid off, the second mortgagor would take the place of the first so they would receive first rights to repayment if the house was sold and any subsequent refinancing would become second mortgagor.

In the event that you have more than one mortgage, refinancing them both for one repayment at lower interest rates will result in a lower monthly premium and this would be far more beneficial than keeping two separate repayments with two separate sets of terms and conditions. In fact, the only reason to consider refinancing any part of a mortgage payment is if interest rates had significantly reduced.

Consolidating payments in this case would certainly justify refinancing. Bear in mind that lenders will probably cap the amount of refinancing and will fix it at a percentage of the house worth. This can vary from lender to lender and this will depend upon credit references and history, etc. If there is a second mortgage to remain in place then this will also impact the amount that can be refinanced. Always take legal advice if in any doubt as being unable to afford the repayments could lead to your home being repossessed.