How to Know if Remortgaging Is the Right Choice for You
Deciding whether or not to remortgage is an important financial decision that should not be taken lightly. With so many factors to consider, it can be overwhelming to determine whether or not it’s the right time to remortgage.
As mortgage advisors, we understand that the decision to remortgage can be a complicated and confusing one. That’s why we’re here to help you understand the factors you should consider to determine if remortgaging is right for you.
In this blog post, we will provide you with all the information you need to make an informed decision on whether or not you should remortgage. We will explore the benefits and potential drawbacks of remortgaging, as well as the different scenarios in which remortgaging could be the right decision for you. Whether you’re looking to reduce your monthly mortgage payments, release equity in your home, or consolidate debts, we’ve got you covered.
So, should you remortgage? Let’s find out.
What is remortgaging?
Remortgaging is the process of switching your mortgage from one lender to another, typically to take advantage of a better interest rate. When you remortgage, you essentially pay off your existing mortgage and take out a new one with a different lender.
Why consider remortgaging?
There are many reasons why you might consider remortgaging, including:
- To secure a better interest rate
- To reduce your monthly mortgage payments
- To release equity in your home
- To consolidate debts
- To switch from a variable rate to a fixed rate mortgage
Should I remortgage?
Whether or not you should remortgage depends on your individual financial situation. Here are some factors to consider when deciding if remortgaging is right for you:
Current interest rates
While interest rates are not the only factor to consider when deciding if you should remortgage, they are certainly an important one. You may be able to remortgage onto a more attractive interest rate than you currently have, which could translate into significant savings on your mortgage payments. For example if you are currently on your lender’s standard variable rate.
However, it’s essential to compare the interest rates from multiple lenders and determine if the savings you will make from remortgaging will outweigh the costs involved in the process. It’s also worth noting that if you have a fixed-rate mortgage and interest rates have fallen, you may face early repayment charges, which could negate any potential savings.
Mortgage type
The type of mortgage you currently have is another important factor to consider when deciding if remortgaging is right for you. For example, if you currently have a variable rate mortgage, you may be exposed to potential interest rate increases, which could result in higher monthly mortgage payments.
In contrast, if you remortgage to a fixed-rate mortgage, you can protect yourself against potential interest rate hikes and enjoy the peace of mind that comes with knowing that your mortgage payments won’t change during the fixed-rate period. However, it’s important to note that fixed-rate mortgages often come with higher interest rates and fees, so you’ll need to carefully consider the trade-offs before making a decision.
Term of your mortgage
The remaining term of your current mortgage is another important factor to consider when deciding if remortgaging is right for you. If you are nearing the end of your mortgage term, remortgaging may not be worth the time, effort, and expense. However, if you have a long way to go on your current mortgage, you may be able to find a more attractive mortgage deal that will provide you with significant savings over the long-term.
It’s important to remember that when you remortgage, you are essentially resetting the term of your mortgage, which could have implications for your long-term financial goals. You are able to have the same term as your existing mortgage or opt to look at shortening or increasing the term of your mortgage.
Equity in your home
If you have built up equity in your home, you may be able to release some of that equity through remortgaging. This can provide you with additional cash to use for home improvements, debt consolidation, or other financial needs.
Equity release through remortgaging can provide you with access to funds that may otherwise be tied up in your property. However, it’s important to note that releasing equity will typically result in a higher monthly mortgage payment, so you’ll need to carefully consider the trade-offs before making a decision.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Fees and charges
When considering remortgaging, it’s essential to factor in any fees and charges associated with the process. These can include arrangement fees, valuation fees, and legal fees, among others. It’s essential to ensure that the savings you will make from remortgaging will outweigh the costs involved.
A mortgage broker can help you compare the fees and charges associated with different mortgage deals and determine if remortgaging is the right choice for you. It’s also worth noting that some lenders may offer to cover some or all of the fees and charges associated with remortgaging, so it’s important to explore all your options before making a decision.
How to remortgage
If you decide that remortgaging is the right choice for you, here are the steps you’ll need to take:
- Research your options – Use a mortgage broker to research your options for remortgaging, and to help you find the most suitable deal for your needs.
- Compare interest rates – Compare interest rates and fees from multiple lenders to ensure you are getting the most competitive deal possible.
- Apply for a new mortgage – Apply for a new mortgage with the lender of your choice.
- Valuation and legal work – Once you’ve been approved for a new mortgage, your lender will arrange for a valuation of your property and carry out any necessary legal work.
- Switch your mortgage – Your new lender will pay off your existing mortgage and transfer your mortgage to them.
Final Thoughts
Deciding whether to remortgage is a complex decision that requires careful consideration of various factors. Before you decide to remortgage, take the time to consider the current interest rates, the type and term of your mortgage, equity in your home, and any fees or charges associated with the process.
If you do decide to remortgage, it’s important to research your options, compare interest rates, and apply for a new mortgage. Aspire’s Advisers can provide expert advice on the remortgaging process and help you find the most suitable deal for your needs. Remember, remortgaging is a significant financial decision, so make sure to take the time to carefully consider your options before making a final decision.
If you have any questions about remortgaging or any other financial advice, please don’t hesitate to contact us at Aspire Financial Advisers.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
| Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 26th May 2023 |