Remortgaging can help reduce your monthly outgoings. Remortgaging is where you take out a new mortgage on a property you already own, either to replace your existing mortgage, to borrow additional money against your property, or a combination of both.
For many people, their mortgage is their biggest financial commitment. Streamlining the largest debt you have can produce the largest savings, sometimes up to several thousand pounds a year. If you’re used to shopping around for the best deal for your electricity supplier, mobile phone contract, and internet package, then you could be missing out if you’re not doing the same with your mortgage.
Why Should I Remortgage?
Most mortgage deals last from two years, right up to ten years, and the different types, include fixed-rate, tracker, or discount mortgages. When this deal comes to an end, your provider will put you onto a standard variable rate. This might be much higher than your original interest rate, so you could remortgage to a new deal to get a cheaper rate.
You can use remortgaging to get a better rate. However, if you are currently tied into a deal, you may have to pay an early repayment charge or admin fee. These charges can be large, but the savings of remortgaging can be even bigger, making it still worthwhile.
If your property’s value has gone up a lot since you took out your mortgage then you might be in a lower loan-to-value (LTV) band, and eligible for a much lower rate, so looking at remortgaging is a sensible option.
Remortgaging can also work if you want to borrow more. If your current lender has said no to lending you extra money or the terms it offers aren’t favourable, you can remortgage to another lender. A new lender might let you raise money cheaply at low rates, whilst considering the fees involved to make sure it actually is cheaper than other forms of borrowing. The most common reasons for remortgaging are to make home improvements, buying a car, or to pay off other debts, but there are many more.
Remortgaging can be complex, so a mortgage broker, like Your Mortgage Hub, can help navigate all the options, and come up with the most cost effective solution for your circumstances.
“Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.”