Remortgaging is an option that many homeowners decide to take. But like with any financing options, you must consider all of your options carefully and make sure you fully understand what remortgaging entails.
Essentially, remortgaging is when a person switches an existing mortgage to a new deal, either with the existing lender or a new provider. This does not require moving house and the new mortgage would still be secured against the same property. Have in mind that the more equity you have and the lower your loan to value (LTV) the more competitive the rates that you can qualify will be.
Benefits of a Remortgage
This is a consideration worth taking on as it allows for a person to find a new deal that could potentially work out better for them. Making the switch could also see a reduction on the payable interest rates.
Furthermore, this act could help to fix your monthly payments and aid against any future rate rises. Switching can also help to free up more money to be used for other things such as home improvements and you could raise a cash lump sum to release equity from your home-a potentially helpful move as long as you can afford the ensuing payments.
Another bonus would be the option to consolidate your debts. Remortgaging a property to consolidate all of the debts into one payment is a popular move, just keep in mind it could cost more in the long run as it means securing added debt against the home.
Lenders are highly competitive and so there are hundreds of offers to choose from and it is beneficial to check the market regularly to see if you can find a better deal then what you currently have-potentially saving thousands in the process.
Some folks even remortgage one property to buy another. This can be a good idea if you have enough equity in your home. It is a bit like remortgaging for a buy to let property however you would be living in the new home yourself and not receiving any rent towards the higher mortgage payments. Therefore, the lender needs to see that you can afford the increased remortgage payments out of your income. If you were to fail to pay the mortgage you could stand to lose the main home as well as the second one.
Other Points to Consider
A mortgage could last many years, so you would need to consider financial implications on a long term basis and not just the short term. A good point to remember is that the decisions you make when looking to remortgage are just as important as when you originally sought out a mortgage deal.
You must make sure you are fully clued up on what a remortgage is and how they work. You should seek professional advice where required because while there are helpful gains to be had in some situations there are also always potential losses-and what works for one household is not always the right answer for another, so each situation needs to be assessed carefully.
If you have arrived at the point where you do think that remortgaging is the right step, hook yourself up with respected expert service and go from there, and hopefully, you will save a good deal of money over the coming period as a result.