Should you Remortgage your Home? What are the Benefits
Remortgaging is when you make the decision to take out a new mortgage on a property that you own already. It may be that you choose to replace the mortgage that you have now, or that you choose to borrow money against another property. Around one-third of all loans in the UK are remortgages, so it is more common than you might think. So, what does remortgaging involve? For a lot of people, a mortgage is the biggest financial commitment that they have, and if you can save money, then it’s certainly an option you should be looking into.
In What Situations would you Remortgage?
In what situations would you remortgage? Take a look below.
Your Deal is about To End
You may remortgage if your current deal is about to end. A lot of mortgages only last for a very short space of time, between two and five years. If yours has come to an end, remortgaging could be the way to go. When your fixed-rate ends, you will be put onto a variable rate mortgage, and this will be significantly higher than your old rate. Start looking around six months before your rate ends so you can avoid being stuck at your lender’s SVR.
Your Home’s Value Has Gone Up
If the value of your property has gone up considerably since you took out your mortgage, then you may find that you are able to get in a lower LTV band. This may make you eligible for a lower rate. That being said, it is wise to make sure that you add everything up to ensure that this is the case.
You’re Concerned about Interest Rates
Before you panic about current interest rates, you need to know that not every mortgage is going to be impacted by the rise in interest rates. It really does depend on the type of mortgage that you have. If you know that the rates for new customers are going to be impacted, you don’t need to worry about yours right now.
You want to Overpay
It may be that you have been given a pay rise or that you have come into a substantial amount of money. Either way, if you want to overpay but your current lender won’t let you, then a remortgage could be wise. It will give you the chance to reduce the size of your loan and you may be able to get a much cheaper rate as a result. You do need to watch out for any repayment charges though.
So, remortgaging can be a good option if you want to take advantage of some of the above benefits. Remember that you can apply for a remortgage up to 6 months in advance, so you can avoid any steep increases in your mortgage should your fixed-rate come to an end before the mortgage terms change.
Source – Moneysavingexpert
