As a homeowner your mortgage is likely to be your biggest debt so remortgaging can provide a way of streamlining your finances – however there may be a number of different reasons why you would want to look for a new mortgage.
Remortgaging is not always suitable for everyone – it’s always wise to consider your personal circumstances, and you may even want to consider the services of a mortgage adviser who can help you to determine whether switching your mortgage is going to be beneficial.
Let’s take a look at some of the advantages to remortgaging your property.
Securing a better rate
Although there has been a recent rise in the Bank of England base rate, mortgage rates are still relatively low so it’s still a great time to shop around to see if you can find a better deal on your mortgage.
Securing a lower rate on your mortgage can help to reduce your monthly payments and could reduce the overall amount you pay for your mortgage. This is ideal for those coming to the end of their mortgage deal or are currently on their lender’s standard variable rate – if you are in the middle of a fixed rate deal make sure you are aware of any potential exit penalties before making the switch.
Protect yourself from rate rises
So we’ve just had a rise of 0.25% but potentially this is just the tip of the iceberg. Staying on a variable rate mortgage could leave you at risk of being impacted by future rate rises. The best rates are typically found on 1-2 year deals; however there are still some great deals to be found on longer mortgage terms, such as 5 year fixed rate deals which will help to protect your payments for longer.
With property prices on the increase, it may well mean that your home is worth much more than what you originally paid. You could use the equity in your home to secure a lower mortgage rate if you’re now in a lower LTV (loan-to-value) bracket or you may choose to free up the equity and turn it into cash. Remortgaging your property to release some of the equity is popular with homeowners wishing to make home improvements, such as a new kitchen, bathroom or conservatory. If doing so, always make sure you consider the implications. Remortgaging your home can be expensive, and could increase the overall amount you pay for your home over the whole term. Whilst your home may go up in value due to the renovations, this isn’t always the case.
What are the terms of your current mortgage? Does your lender allow you to make overpayments without incurring any penalties? If you’d like some more flexibility around what you can do with your mortgage then it may be worth looking at what other lenders can offer.
SoSmart Money are specialists when it comes to mortgages and insurance. We can put you in touch with a trained expert, who has access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable lender and product for your needs.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.