Remortgaging can put a significant amount of money back in borrowers’ pockets.
While many of us shop around for the best car insurance or phone contract, we often don’t pay the same attention to our biggest financial commitment.
Similarly, a remortgage might not be about saving money at all, rather it can be used to pay off your debt sooner.
In the right circumstances, remortgaging can be the best way to reorganise your finances around your specific ambitions and lifestyle.
Why should I remortgage?
There are a number of reasons why you should consider a remortgage.
For example, if your house value has gone up considerably or you’re concerned about interest rates increasing.
Often, people want to remortgage to either save cash to put back into the home, such as installing new kitchens or bathrooms, or for other purchases.
The other popular reason is to switch to a lender which offers better terms for you (for example, interest-only) or move to a lender that allows overpayments if your current one does not.
Consider your goals and do your research accordingly.
Weigh up the benefits
Consider how remortgaging might impact your lifestyle.
Before jumping into changing your borrowing circumstances, take a moment to think about how your life might have changed since you last secured a mortgage.
Have you had a child or changed jobs? Has your available disposable income gone up or down?
Have you paid off loans or acquired new ones?
Weigh up the factors that could impact your spending power before remortgaging.
Take your time
It can feel convenient to remortgage with your current lender but don’t jump into a new deal without checking out what’s available elsewhere.
Mortgage comparison sites will provide a clear indication of the deals available to you from a wide selection of lenders.
In fact, as an example, a comprehensive rundown of rates and deals from brokers such as Trussle will compare over 12,000 mortgage options from 90 lenders.
The market is incredibly competitive and there’s often a better deal out there, so take your time and consider all the options.
Evaluate all the factors
Don’t leave remortgaging too late as your current lender could switch you automatically to a standard variable rate if you come to the end of your current fixed term which may add unnecessary costs.
Similarly, when you begin comparing deals, don’t rely on the monthly repayment terms as the only indicator of value.
You must also check the fees charged for valuations, early exits, legal fees, early repayment and any product or arrangement charge.
Summing Up
It is a common practice to remortgage, the benefits of which could save you significant amounts of money each month.
That could give you valuable extra cash to inject into other purchases such as home improvements.
Conversely, it could also see you pay off your debt far more quickly.
That’s why taking your time to understand the market, knowing what you want to gain from remortgaging, and how best to go about it, will put you in the best place to reap the rewards.
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