Many people decide to remortgage their home in a bid to either replace their existing mortgage or borrow money against their property for a number of different reasons.
Whether you’re looking to make home improvements, extend your property, or even consolidate existing debts, there are many potential benefits that could come hand in hand with remortgaging your property.
Property owners may also remortgage their home to release equity if their home has gone up in value, or switch to a longer or shorter mortgage term.
The advantages of remortgaging
Taking a new mortgage out on your existing property could save you thousands of pounds every year, by allowing you to reap the benefits of better interest rates on a new deal. This is one of the main reasons why property owners decide to take this route, as reducing your mortgage payments by even a small amount can allow you to make significant savings.
The vast majority of homeowners take out their mortgage for a term of 25 years, however it may be possible to extend your mortgage term if it means you can switch your mortgage to a better rate.
Of course, at the same time, you need to think carefully about the advantages against the costs of re-mortgaging, as there are a number of administrative and arrangement fees that you will need to take into account, including set up costs and conveyancing coasts.
When is the best time to remortgage?
All new mortgages come with a headline offer (an introductory offer) that generally has a term of two to five years, during which period a charge for early redemption (ERC) will apply. Once this term comes to an end, borrowers can then switch providers without incurring the ERC.
If your financial circumstances have changed, re-mortgaging could be a great option, especially if your lender’s remortgage rate has increased.
Is remortgaging a suitable option for everyone?
Although remortgaging has many benefits, it’s not necessary a suitable option for everyone, especially if you have little equity in your home, you’re close to retirement age, the value of your property has decreased, or you have had credit issues.
When thinking about remortgaging, all homeowners should seek independent financial advice in order to determine whether or not this is a suitable option based on their personal financial circumstances.
Of course, there are also a number of alternative options to re-mortgaging with another lender, including transferring to a new product with your existing lender, loans or second mortgages.
If you’re a freelancer, contractor, or you’re self-employed and you’re thinking of remortgaging your property, get in touch with CMME today!