5 Reasons to Remortgage your Home
First of all…
What is remortaging?
Remortgaging is essentially switching your current mortgage to a new deal, either with your existing lender or a different provider. You’re not moving house and the new mortgage is still secured against the same property.
The more equity you have and the lower your loan to value (LTV), the more competitive the rates you’ll qualify for.
There are a number of different reasons why you may want to remortgage your home, and these will affect which deals appeal to you.
In this article we will list five of the most common reasons for people opting to remortgage their home, and explain why you may want to do so.
To get a better interest rate
When you take out a new mortgage, you normally get an introductory deal – typically a fixed rate or a low tracker rate – which will likely last for between two and five years. If you’re currently on an introductory deal but the period for this rate is soon ending, it’s understandable that you might want to shop around and avoid being moved onto your lender’s standard variable rate.
You might be able to get a better deal elsewhere, so when your introductory period ends, take a look at the market to see if switching to a new mortgage deal will save you money. Just ensure you take the time to do your sums to get a clear idea of what your monthly payments will be now and in the long term, bearing in mind potential future rate changes. Compare this to your current situation and make sure it’s worth it before making the change.
To make home improvements
One of the most popular reasons for people remortgaging is to acquire funds to carry out home improvement work. This is often seen as a sensible investment, as making improvements will likely increase your home’s value, meaning you can expect to see a return at some point in the future.
For more flexibility
Remortgaging could also allow you to get a more flexible deal – for example if you want to overpay in order to pay it off over a shorter period of time.
Or maybe you want to switch to an offset or current account mortgage, where you use your savings to reduce the amount of interest you pay permanently or temporarily – and have the option to draw your savings back if you need them.
If you’re home has risen in value during the period of your mortgage, and you want to reap the benefits of this without selling, you may want to consider remortgaging for equity release. This can be built into the terms of your remortgage deal, however it is essentially further lending on your property, so we wouldn’t recommend doing this without considering other options first.
To consolidate debt
Debt consolidation is a very common reason why people look to remortgage. If you’re a homeowner and have multiple debts that you’re struggling to keep on top of, it can be tempting to borrow money against your home in order to clear these debts.
However, even though interest rates on mortgages are typically lower than rates on personal loans – and much lower than credit cards – you could end up paying far more overall if the loan is over a longer term. Moreover, securing funds with your home can be dangerous, as failing to meet the repayments could leave your property at risk.
Hopefully this has helped clear up any queries you may have had!
Don’t forget to contact us here if you have any more questions