Remortgaging: What Is It and When Might I Want It?

By February 6, 2019Guides, Uncategorized

Mortgages last a long time. Your financial situation may change many times over the span of your mortgage. This means that the product you selected at the beginning of the mortgage period may not be the best product for you years down the road. There might be a better deal out there to suit your repayment needs.

What is it?

Remortgaging means changing your mortgage deal. This can mean switching to a different product from your existing lender or changing lenders altogether. However, when you remortgage, the mortgage is still borrowed against the same property, and you don’t move, you’ll simply change the mortgage product you have against your current property.

There will often be fees that come with remortgaging. Some of these may come in the form of exit fees from your current mortgage, arrangement fees and booking fees for the new mortgage, and solicitor fees to register the new lender’s interest on the property.

Why Remortgage?

There are a number of reasons why it might pay to remortgage. However, it is always worth consulting an independent mortgage adviser to analyse your current situation and help choose a package to change to.

Your Fixed Rate Mortgage Will Soon End

Many people decide to get a remortgage because their fixed interest rate period is about to end. Most fixed interest rate mortgage periods last between two and five years, after that period you will be on your lender’s standard variable rate (SVR). In this scenario, it may pay to remortgage and find a cheaper rate for when your fixed rate period ends.

You Need More Flexibility

You might have recently had a significant pay rise and want the flexibility to make additional repayments on your mortgage. Remortgaging to a product which allows you to make additional repayments would bring you the flexibility you need.

National Interest Rates are Rising

If the Bank of England is planning on increasing its base rate, you may find your mortgage payments increase with it. Remortgaging to a fixed rate mortgage could save you money.

Debt Consolidation

If you have outstanding debts which are incurring high interest rates, it may be worth consolidating them within your mortgage, where the interest rate is much lower. However, be careful, as these debts would reduce the equity you own in your home.

Home Improvements

Many homeowners use remortgaging as a way to receive credit to carry out home improvements. Just be aware that your lender may wish to see proof in the form of construction quotes before they allow you to borrow the money on your mortgage.

Remortgaging can save you a significant sum of money when it is done correctly, and all the costs are considered. However, there are many factors to consider and costs associated with remortgaging. For this reason, it pays to take the time to explore all options and consult an independent mortgage adviser where necessary.

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