THINKING ABOUT REMORTGAGING YOUR HOME? HERES OUR ULTIMATE REMORTGAGE GUIDE.
Most people require a loan from a bank or building society to enable them to buy a property of their own. However, while you should always opt for the best loan around at the time, other deals may later appear that prove to be more affordable than the one you are on now.
In this situation, you may wish to think about whether a remortgage would be a good idea. We’ve compiled a list of common questions and answers on this topic for you. It provides a full guide to what the topic is about, including everything you need to know and understand before switching to a new home loan.
WHAT DOES REMORTGAGE MEAN?
Remortgaging occurs when you want to switch mortgages without moving home. You would take out a second loan to pay off the first one, attaining a better deal in the process. The second loan may be for a different amount to the one being replaced too, depending on circumstances.
WHY DO PEOPLE REMORTGAGE THEIR HOME?
There are many reasons why people do this, and we’ll cover them throughout this guide. However, many people switch to save money. Remaining with your existing lender after your initial deal reaches the end of its term may seem like a good idea if their standard variable rate (SVR) is appealing. However, if you are willing to take a little time to look for a better rate, remortgaging can save you a significant amount. It costs nothing to find out if this would be the case. All it takes is a few minutes of your time.
Your current mortgage deal may soon be ending with your existing lender. The usual course of action is for the lender to switch you over to their standard variable rate. Not only is this typically higher than the rate you’ll have been paying, it can – as the name suggests – vary over time. If the Bank of England base rate rises, your interest rate will rise too. It’s often the case that the switch from a fixed rate to a standard variable rate can result in increased monthly payments, not to mention greater uncertainty about future changes.
It’s also possible that the lender may offer an alternative rate to keep your business with them. While it may be tempting to accept, it would be foolhardy to do so – or to switch to the SVR – without first seeking independent advice. We can help you determine whether remortgaging is the right option for you. If so, we’ll then help you find an arrangement that provides you with the best value and greatest benefit.
There are other reasons to do this though. Some people choose to find a new home loan because they wish to release some of the equity they have built up in their property. This could be used for multiple reasons, such as renovating or improving the property to raise its value further.
It is also possible to release some equity to pay off other debts. An unsecured loan would have a far higher interest rate than any mortgage you could get. By switching deals to save money and release cash from your bricks and mortar, you could clear any debts held on expensive credit or store cards.