Should I Remortgage My Home?

Getting a remortgage means you are taking a new mortgage out on a property that is already yours, either because you want to replace your current one or because you want to borrow some money against it.

Did you know that about a third of the home loans made in the United Kingdom are remortgages? Does this mean it is something you should do? The following guide explains the situations surrounding times to or times not to remortgage your home.

For the majority of people, their largest monetary commitment is their mortgage. Streamlining the biggest amount of debt a person has can then equate their biggest savings, at times thousands of dollars annually.

If you consistently try to save money, for example trying to find a phone plan or television set for the lowest possible price, you are missing out on a great way to use those same bargain-hunting skills for your mortgage! Another option is to get hard money loans for your house.

Like anything, there are some pros and cons to deciding to remortgage your home. Below, both of these are explored to help you make the most informed decision possible for your home mortgage.

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Why Should I Remortgage? Some reasons why you might be considering it…

1) Your current mortgage deal is close to its end. Many of the greater mortgage deals do not last a long time. The typical length of a fixed-rate, discounted, or tracker mortgage is only about two to five years.

2) You’re looking for a better rate. If you started a mortgage in an initial deal, you might have to pay charges for early repayment. Sometimes, these fees can be incredibly large, up to two to five per cent of the outstanding loan amount. There is also usually an exit charge, also referred to as an “admin charge” or “deeds release charge,” when a mortgage is repaid.

3) Your home has increased considerably in value. If your property value has rapidly risen, you may discover that you’re now eligible for lower rates due to a lower loan-to-value band. Watch your sums, but definitely check this.

4) You are concerned that interest rates may rise. Before you get anxious, make sure that you are clear on what “rates going up” means. If it is referring to the Bank of England’s base rate, which is predicted to rise, it may directly affect mortgage payments depending on your specific type of mortgage plan. If it is the rates that new customers are being offered on their mortgages, then this does not necessarily mean that your payment will be affected.

5) You want to pay a little extra, but your lender doesn’t allow that. If you’ve had a pay raise or inherited an extra amount of money than your previous income, you may desire to pay more to your mortgage. Your current deal may not allow you to do this or may limit the amount of your overpayment.

6) You want to make a change from an interest-only mortgage to a repayment mortgage. For this kind of switch, you should not need to remortgage. Instead, your lender or bank should be able to easily make this switch.

7) You’re wanting to borrow more money. Maybe the current lender you’re working with has not granted you extra money in the form of a loan or the loan terms aren’t desirable.

Remortgaging in this situation may allow you to raise more money cheaply while having low rates. Another option is to get probate loans to make ease the financial situation you are in. Remember, you must take all fees into consideration to see if it will end up being a cheaper option as opposed to other methods of borrowing.