As a homeowner, it’s highly likely that your mortgage is your single biggest financial commitment. As such, it makes sense that you’d want to make sure you’re getting the best deal possible – nobody wants to be paying more than they need to be.
Is remortgaging right for me?
There is no denying the fact that remortgaging can deliver substantial benefits, but only in the right circumstances. If one or more of the following statements are true, remortgaging could be the right solution for you.
You want to make savings
Saving money on mortgage payments is the most common reason for remortgaging. Moving on to a new deal could reduce your interest rate and therefore your monthly payments. The exact amount of money you save will vary from person to person, but switching to a better deal could see you reduce your monthly payments by hundreds of pounds. It’s important to weigh up any potential savings against early repayment charges or exit fees before making a decision.
You want better mortgage terms
While your mortgage may have been the perfect one for you when you first signed up, things change, and you may feel that your current terms don’t suit your situation anymore. Maybe you’ve inherited some money or have been promoted in work and received a subsequent pay rise. You may want to use this cash to make extra payments but aren’t allowed to on your current deal.
Or maybe your financial future is uncertain, and you need the ability to miss the odd payment without being penalised. Whatever the reason, remortgaging could help you find another deal that is better suited to your current circumstances.
You want to raise funds
It could be that you’re in need of some additional funds but you haven’t been able to secure a loan from your current lender, or you have but the terms aren’t particularly attractive. Remortgaging can help you raise the necessary funds quite easily, but it’s important to take potential fees into account.
It’s worth keeping in mind that when you’re remortgaging, your lender will probably ask you what you’re raising the capital for. You may also be required to provide evidence if you’re looking to borrow a large amount, such as quotes or invoices.
Your current mortgage deal is finishing
Many mortgages, such as fixed rate, tracker or discount mortgages will only last for a limited period of time, often between two and five years. More often than not, when this initial deal comes to an end, your mortgage lender will move you onto their standard variable rate which is often less attractive. If this is the case, it’s a great time to look at remortgaging and switching to a new lender – one offering more attractive terms.
When would remortgaging not be right for me?
It’s important to decide whether the potential savings remortgaging would offer outweigh the costs that come with it. If any of the following statements are true, remortgaging may not be right for you.
Your property has decreased in value
If the value of your property has dropped, remortgaging can end up putting you into more debt, rather than saving you money. With little equity, making overpayments as and when you can – as long as you don’t get charged for doing so – will decrease the debt faster than remortgaging. If prices in your area go back up again, then you can consider remortgaging as an option.
Your current mortgage debt is quite small
If you’ve paid off the majority of your mortgage and only have a small part left to pay, remortgaging may not be worth it. Many lenders won’t take on new mortgages once your remaining debt falls below a certain amount, often around £25,000.
Your financial circumstances have changed
It’s quite likely that you’re in a different place, financially, since you took out your current mortgage. Maybe you’ve moved job, stopped working, or recently become self-employed.
Lenders have become more cautious in recent years, and if you don’t fit into one of their pre-defined categories, you may find it more difficult to get an attractive deal.
Aldermore’s top tips for remortgaging
So, you’ve weighed up the pros and cons, assessed your situation and decided that remortgaging is the right option for you – what now? Follow our top tips to make your remortgaging go as smoothly as possible.
1) Research the market
As with any financial decision, research is key. Check the value of your property to see if it’s increased or decreased, and shop around to see what mortgage deals are currently on offer.
2) Work out the cost of switching lenders
Even though you might be able to access lower interest rates by switching to a new lender, it’s important to take any potential fees into account. Make sure the benefits outweigh the costs.
3) Assess what’s best for your own personal situation
As we mentioned earlier, what’s right for one person may not be right for another. Assess your own current situation to first decide if remortgaging is right for you, and if it is, what deal is best suited to your specific requirements.
4) Start early
If you want to remortgage, start doing your research as early as possible. Depending on the lender, it can take around 3 months to complete the entire process, so make sure you give yourself enough time.
At Aldermore, we offer a range of remortgage deals and can help you save money, consolidate debts and release equity. We consider every application on an individual basis and work to find flexible solutions with your personal needs in mind. We pride ourselves on taking a common sense approach to your application.
Visit our remortgaging page to find out more.
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