Why You Should Remortgage to Save Money

Faizan Raza  |

Remortgage enables you to take out a new loan on some property that has already been owned by you. It is usually done when someone is looking forward to replacing their existing property mortgage, or to borrow money against it.

It is a stated fact that most home in the United Kingdom are remortgages. In this article, we will tell you why it is beneficial to remortgage to save money, enlightening you with some of the best remortgage deals.

Further added are reasons that clarify why you should remortgage.

All mortgages last for a very short while, which can be from two years to five years. This is the typical time period for a discount or tracker mortgage on a rate that is fixed.

The lender will put you on an SVR- Standard Variable Rate, when the mortgage is ended. The rate is mostly higher than the former rate of interest and the available best buy rates.

In such a situation, you are eligible to get a rate that is much lower because the value of your property has increased dramatically since the mortgage has been taken out by you. You may discover that you have a very low loan to value band. Although it is necessary to keep track of all the calculations.

If you are bound to a deal that has been approved by you initially, you cannot save yourself from the repayment charges. Those charges can be as large as two to five percent on your outstanding loan. Moreover, there is always a deed free, which is basically your exit fee whenever you repay a mortgage. These drawbacks surely should not prevent you from it because if you look at the bigger picture, you will have huge savings. Especially if the debt of your mortgage is very large. Once again, you just need to keep your sums calculated properly.

Before you start worrying about the interest rates, get your facts straight. Research what it means when the rates go up. If the base rate of the Bank of England is predicted to rise, depending on the type of mortgage you have, your mortgage payments may be directly affected. However, it certainly does not mean that you will be affected by the new rates either.

It is always possible that your lender might not offer you what you expect, and that he or she refuses to give you extra loans. If you remortgage with a new leader, it can help you increase the money without any catch, cheaply on rates that are lower. But, make sure you calculate your sums before doing so, to be sure whether it is profitable to do so or not. Always remember that the new lender enquires you before giving you the loan. It is easier to get a loan for that new car that you always wanted compared to the new business you plan to start. Why so? Because a new business is never guaranteed to make profit. So, give them a reason that is genuine. Such as home renovations or paying off debts. Moreover, they will always ask you for an evidence if the loan is huge. For instance, builder quotes, or a proof that you have used the money in the right place.

You are looking forward to changing your interest only mortgage to a repayment mortgage? Lenders usually do not complain in such a situation and they are always happy to do so. You really do not have to go through the hassle of remortgaging to do so. There are many ways to do so. One of them is that you can change your deal partly, leaving some of it to an interest only deal. Usually those who expect a mortgage downfall opt for this. Although remember one thing, if the situation is the other way around, it might be very difficult to convince your lender.

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