When you remortgage, you are basically making a switch from one lender to another, using the proceeds from the new mortgage you got to pay off the old mortgage from the previous lender. For both, you are using the same house/land which up put up as security for the mortgage. This process is not so common in India, though.
A person may use remortgage to take advantage of the initial low offer given by a lender, switching over once the duration of that offer is over to then take advantage of the initial offer of another lender. This thus reduces the overall costs.
The process does not involve paying off mortgage to one financial institute and then mortgaging the asset to another institute. It just is a process of transferring the mortgage from one lender to the other. Most of the time we tend to refinance when repayments - or installments are lesser in the second one institute or you get a better rate of interest.
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Suppose your current mortgage is with the ABC bank but you want to Remortgaging it with some other Bank because you like their deal which will save your £100 per month. So Remortgaging will help you to change your your present mortgage and moving the loan to a different lender.
It is mostly done to save money as I also mentioned in the above example but it can also be done by many other reasons.
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