What is Remortgaging? - Your Remortgage Explained
Welcome back to MO, have you missed us? We’ll take your silence as a yes…
So, we’ve been racking our brain for things to let our readers know, and we’ve come up with an idea… Who’s heard of remortgaging? No one? Good!
This week we’re going to speak about remortgaging. If you’ve clicked on the title, you’re probably wondering what the answer is anyway – so good thing you’re reading this, eh?
What is Remortgaging?
Okay, okay. It’s why you’re all here and reading this, so we’ll start with it. Just don’t exit the page straight after, okay?
Remortgaging is the process of taking out a brand-new mortgage on your home or property to either a) replace and pay off your existing mortgage or b) to borrow more money against your property.
The fact is that 1000s of people, all across the UK use remortgaging as a way of saving themselves some money in the long run. But why would you remortgage?
Reasons to Remortgage
One of the main reasons to remortgage your home is to save money, but it can be for those in need of a large loan and need to borrow against their home. Dependent on your mortgage provider, you may want to consider remortgaging your property. There’s a number of reasons to think about doing so:
- Rising Interest Rates
Yes, if the national interest rates are predicted to rise, this can affect how much you’ll be paying on your mortgage (dependent on the type you’re on). When the Bank of England’s interest rates rise, your mortgage interest rates do too. Some remortgage to avoid paying more. The Bank of England base rate fluctuates often, so it's a good idea to find a good deal through remortgaging.
- End of a Deal
Remember that incentive offer you go when you first signed up for your mortgage? Well, that doesn’t last forever. It’s true that most of the good deals on last for the first 2-5 years of the mortgage. Many choose to remortgage and find a new deal. If you're unsure what type of mortgage you're on, ask your lender. You may be on a fixed rate, tracker rate or standard variable rate mortgage.
- Need to Borrow More
Like we’ve mentioned, some choose to remortgage when they need to borrow more against their home. This isn’t always cheap, however, because there are fees attached, so you should always shop around and consider other lending alternatives. Dependent on your lender, you may be able to borrow more – you have to ask! When some lenders don’t lend more, people find that remortgaging is the only option they have.
- Wanting to Overpay
As mad as this sounds (who would ever want to overpay for something?) it’s actually quite practical. See if you find yourself in receipt of a bit of extra income, through a pay rise, or have even inherited some money, you may want to pay off a chunk of your mortgage. Why? To make payments cheaper for you! And so you’re out of debt a little quicker. However, some lenders won’t let you do this, so remortgaging is a way to find a lender that will let you! You may even find yourself an even better rate! Many consider remortgaging when they want to overpay and aren’t allowed to.
- Home’s Value Risen
You may find that the price of your home has suddenly shot up! Whether you’ve invested in an extension or you’ve finally fitted those gold-plated bricks, if a home’s value rises, it may be time to remortgage. See for your mortgage there’s a loan-to-value band, which means if the mortgage you took out is less than the price of your home, you’re eligible to shift bands and get better rates.
- Better Interest Rates
Finally, if you’re looking for a mortgage with better rates, you can remortgage in order to find one. It means you’ll have to pay an exit fee of sorts, as it counts as early repayment, so you’ll need to calculate if it’s actually cost-effective for your or not. If you’ve still got a large amount left to pay, it’s a good idea. If not, well, you get the idea… Remortgaging could mean you find a better mortgage with better and lower interest rates - better mortgage deal rates means lower monthly repayments, meaning you're saving money and freeing up some cash.
And that’s what you need to know about remortgaging! Always do your homework and the maths to see if it’s beneficial for you. If you fit one of the criteria above, you should look into remortgaging! If not, then it’s not for you.
To look around for personalised mortgage deals, use Mortgages Online to find the right deal for you! Click here to see what type of mortgage you could get.