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.
Benefits of Remortgage
- People in the UK choose to remortgage because it helps them save money by switching to a rate that is lower.
- When the mortgage is first taken out, the rate given to you will be discounted or have a track rate that is lower.
- As soon as the deal will end, the rates will shift to a rate equal to the lender’s standard, which is higher. Due to this particular reason, many homeowners prefer remortgaging.
- Remortgaging with the lender will enable you to switch to a lower rate and deduct the payments in accordance with that.
- A fixed mortgage rate is higher compared to a tracker, although it provides you with added security. It helps you in keeping track of how much you pay every month.
- You can reduce the payment terms by opting for some of the best remortgage deals. Looking for a cheaper deal and keeping the repayments similar will help you pay off your mortgage much faster.
- Helps in utilizing the equity of your home for extra cash by taking a larger loan. The extra money can be used in renovating your house, improving its value.
- Mortgages have a lower rate of interest.
Further added are reasons that clarify why you should remortgage.
Your Current Deal is Ending
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.
The Value of your Home has Increased Drastically
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.
Looking for a Better Rate?
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.
Worried About Interest?
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.
You Want More
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 Want to Switch your Mortgage
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.
Everyone looks for a flexible mortgage, because one can never be too sure about their financial status. You may lose your job, switching to a new one is also inevitable. You may want to go back to studying in college again, or travel etc. Whatever the reason may be, everyone loves a mortgage that has the feasibility of skipping payments. Because that will make your dream of skipping payments come true. Other than that, many of us get attracted to other mortgage plans that help us save by combining the mortgage with our bank accounts. In such cases, remortgaging would be a wise choice for you.