Remortgaging is the process of taking out a new mortgage on a property you currently own. You may choose to do this for one of two reasons: to replace your existing mortgage, or to borrow money against the value of your property.
In the current economic climate, remortgaging is becoming an increasingly popular choice amongst homeowners. You may, however, be unsure as to whether or not you are the right candidate for remortgaging. That’s why we’re here today to help you understand whether or not you may be able to benefit from taking out a new mortgage on your property.
Is remortgaging the right choice for you?
It’s normal to feel a little sceptical at the mention of remortgaging, as we often relate this to the prospect of taking on more debt. Whilst remortgaging in order to release the equity tied up in your property is a very viable option, the majority of remortgages take place simply as a means by which to save money on monthly repayments. So, that’s what we’ll be focusing on here when we talk about “remortgaging”.
For many homeowners, remortgaging is the option that offers the best value for money when their fixed, tracker or discounted mortgage contract ends. This is because when your current deal comes to a close, you’ll no longer benefit from a preferential rate.
Remortgaging at this time is a much smarter choice than simply resting on your laurels, as your current lender will likely switch you over to their more costly Standard Variable Rate (SVR). Homeowners who are moved over to their lender’s SVR often pay up to double the interest rate that they were paying throughout the course of their fixed-term contract.
By remortgaging either with your current lender or a different one, you are able to browse the market and ensure you are receiving the best possible deal on your mortgage. Additionally, you may also be able to lower or increase your mortgage term if you meet your lender’s eligibility criteria.
By working with a trusted financial adviser, the process of shopping around for a new mortgage deal becomes far easier. Our fantastic advisers here at The Mortgage Brokerage can help you to demystify the process of remortgaging your property and assist you in securing the best possible deal that will save you money in the long run.
Why might you consider remortgaging?
There are a number of reasons that may motivate you to seek a better deal on your mortgage. Here’s a handful:
1: Your current deal is soon to end
According to stats from Habito, one in four homeowners in the UK are on their lender’s Standard Variable Rate. This default tariff can mean paying far more than necessary. Our advice? Don’t settle, remortgage.
If your current deal is coming to a close, it’s essential that you start to shop around for a new deal that will offer you the best possible rate. Ideally, you should start looking around three to six months before your current deal ends, in order to mitigate any delays or snags that may leave you stuck with your current lender’s SVR.
2: You’re worried about rising interest rates
Unfortunately, the current economic crisis has, unsurprisingly, very serious implications for the mortgage market. Chief amongst these implications are rapidly rising interest rates.
Interest rates on fixed mortgage deals are currently rising at the fastest rate we have seen in over a decade. However, there are still plenty of attractive deals offering various benefits available. So, if you’re considering remortgaging, it would be very wise to do so as soon as possible, as interest rates aren’t expected to lower anytime soon, that’s for sure.
3: The value of your home has increased
The trend of rising house prices evidenced over the last few years means that many homeowners now find that the value of their home has increased.
If you have had your home valued and have discovered that its value has increased since you entered into your mortgage, you may be in a lower loan-to-value band now. This means that you could be eligible for considerably lower rates.
What steps should you take before remortgaging?
Before you look to enter into a new mortgage contract, there are a number of steps to take that will serve you well in the long run. It’s wise to consider the following:
- Get ahead of the game and start planning around three to six months before your current mortgage deal expires
- Double-check for any exit fees or early repayment charges
- Straighten out and smarten up your credit file
- Chat with a mortgage broker for tailored guidance. This is especially useful if you are self-employed or on a variable income
Here at The Mortgage Brokerage, we can walk you through the process of remortgaging your home and ensure that you get the very best possible deal. Get in touch today to get the ball rolling.
