Date: 1 March 2023Remortgaging is a process where you switch your existing mortgage to a new lender. You usually do this when your current mortgage product has run out and you want to avoid going on the standard variable rate offered by the current lender, which is usually higher than other rates on offer.
Remortgaging may allow you to take advantage of better interest rates, lower monthly payments, or to access the equity that you have built up in your home. Whilst remortgaging can mean additional fees, more paperwork and hunting around for the best deal, with the right advice it can also offer a huge range of benefits for homeowners.
The most common reason to remortgage is to take advantage of lower interest rates, especially if your mortgage deal is coming to an end. By remortgaging and avoiding the standard variable rates you could save thousands over the lifetime of your mortgage.
Remortgaging can also result in lower monthly payments, this could provide valuable breathing room in your monthly budget and free up cash for other expenses.
If you have a variable rate mortgage, and are concerned about interest rates rising, switching to a fixed rate mortgage will guarantee you that rate for the term of the offer, usually 2 or 5 years, meaning you will know how much you are paying each month taking away any uncertainty you have around possible increases to your monthly mortgage payments.
Remortgaging is a way of releasing equity that you have built up in your home. This can help with home improvements, paying of debts or covering other expenses.
If you have multiple high interest debts, such as credit cards or loans, remortgaging can be a way of consolidating them into one loan with a lower interest rate. This can save you money on interest over time and help you manage your finances more easily.
Remortgaging is a good time to discuss the length of your full mortgage term. This could be decreasing the mortgage term to allow you to pay off your home more quickly saving you money in the long run or increasing to term to make the monthly payments more affordability especially in times when interest rates are high.
If your financial situation has improved since you first took out your mortgage, perhaps you have been promoted or started a new job, you may be able to qualify for more favourable loan terms such as a lower interest rate or a shorter payment term.
Are you thinking of moving or redeeming your mortgage in the next couple of years. Taking mortgage advice at this time could save your £1000’s in fees or penalties, such as an early repayment charge. This is a great time to discuss the advantages and disadvantages of a mortgage product with no fees or penalties.
If you’re unhappy with customer service you have received from your current lender, remortgaging can be a way of switching to a lender that meets your needs.
Finally, remortgaging can be a way to take advantage of special offers or incentives from lenders, such as cashback or reduced fees. While these offers should not be the only reason that you remortgage, they can be a useful bonus if you are already considering remortgaging.
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*You may have to pay an early repayment charge to your existing lender if you remortgage
* Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
