What Does A Remortgage Mean and Should You Consider It?

<

A remortgage shouldn’t be confused with a mortgage since it’s not the same. A remortgage is the one wherein you take a new mortgage on your house or any other property that you already possess. This can be done for two reasons. One reason can be you need to borrow money against your house or you want to replace your current mortgage.

When it comes to a remortgage, almost one-third of all the home loans in the United Kingdom are remortgages. In this article, you’ll get to know everything about remortgages as well as whether you should go for them or not.

When should you opt for a remortgage?

There are certain situations when you can go for a remortgage. These include:

  1. The value of your home is increasing

When your property’s value is augmenting significantly, no matter whether it is a residential or a commercial property in the UK, then it is the right time to go for a remortgage. This can give you a lower loan-to-value ratio and thus make you qualified for lower interest rates. However, you must do all the calculation before you go for a remortgage.

  1. Interest rates might go up

If you think that the rate of interest of your mortgage bank can go up, then it can directly affect the payments of your mortgage as per the mortgage type you have.

  1. You want to pay extra

If you have decided to overpay on your mortgage but your lender does not allow it, then also you can go for a remortgage.

  1. Other reasons:
  • Your existing deal is finishing
  • You want better rates
  • You want to borrow more money
  • You are looking for a flexible mortgage

Is a remortgage beneficial?

If you’re seeking an answer to this question, then it is a huge YES. A remortgage can actually help you save money. A lot of people pay a mortgage. However, if you streamline this debt, you can save a lot, which can sometimes go up to £1,000 every year. So, let us look at some of the reasons when a remortgage can come to your financial rescue.

  1. Gets you a new deal on a mortgage

A lot of mortgages have a short lifespan, which generally ranges from 2 to 5 years. This is the general time length that is provided on a tracker, discount, and fixed rate mortgage. And, when this mortgage ends, your lender with then place you on the mortgage’s bog SVR (Standard Variable Rate).

So, this amount will most probably be higher than the best purchases as well as your old rate of interest. Therefore, you can remortgage in order to get a cheaper interest rate. You must look for such a remortgage 14 weeks prior to the completion of your rate of interest.

  1. Better rate

An initial mortgage deal comes with an early repayment fee, which is a bit huge. This is generally equal to 2% to 5% of your total outstanding loan. Moreover, there are typically small exit charges, which are also known as ‘deeds release fee’ or ‘admin fee’ that you need to pay in order to repay a mortgage.

Therefore, when your introductory period finishes, you must scrutinize the market and verify if you can switch to a new mortgage deal, which can help you save money. This means you can go for a remortgage since it can deliver huge savings, particularly if you have a colossal amount of mortgage debt. Just make sure that you calculate everything before going for it.

So, now you know everything about a remortgage, as to what it is, how it works, when you should go for it, and how it is beneficial to you. You can successfully take a remortgage now and thus save money on your existing mortgage.

Speak Your Mind

*