The Best Time to Remortgage Your Home: A Comprehensive Guide

Remortgaging your home can be a smart financial move. It’s a way to switch to a more favourable mortgage deal, borrow money against your property, or overpay your mortgage to reduce your overall debt. But when is the best time to remortgage your home? In this guide, we’ll explore the different scenarios where remortgaging can make financial sense and how to go about it.

How Does Remortgaging Work?

When you remortgage your home, you’re effectively taking out a new mortgage to pay off your existing mortgage. You might do this with your current lender or switch to a new lender. Remortgaging can help you save money, release equity in your home, or change your mortgage terms. You apply for a remortgage in the same way you applied for your first mortgage, by making an application to a mortgage lender.

When is the Best Time to Remortgage Your Home?

You can apply to remortgage your home at any time, but there’s no point in switching mortgages for the sake of it. The best time to remortgage is when you’d end up in an improved financial situation as a result. 

Here are a few scenarios where remortgaging could be appropriate:

Your Fixed-Rate Mortgage Deal is Coming to an End

When you’re coming to the end of your current fixed-rate mortgage deal, it’s important to start shopping around for a new deal. If you don’t, you’ll automatically be moved onto your lender’s standard variable rate, which can be more expensive. By remortgaging to a new fixed-rate deal, you can avoid any rate hikes and lock in a new deal with a lower interest rate, making your monthly repayments more manageable.

Interest Rates are Rising

Interest rates have risen significantly in recent times due to rising inflation, and this has caused mortgages to become more expensive. If you think you’ll struggle to keep up with increased monthly mortgage repayments, it might be a good idea to lock in a fixed-rate deal now, while rates are still relatively low. This could save you money in the long term, as you’ll be protected against any further rate increases. It’s important to note that remortgaging before the end of your current deal could result in an early repayment charge, so make sure to weigh up the potential savings against any charges.

Interest Rates are Lower than When You Took Out Your Current Mortgage

If interest rates have fallen since you took out your current mortgage, you might be paying over the odds. By remortgaging to a new deal, you can take advantage of lower rates and reduce your monthly repayments. It’s important to consider the overall cost of the new deal, including any fees or charges, to ensure that you’ll actually save money in the long term. Also, be sure to check the terms and conditions of your current mortgage deal to see if there are any early repayment charges or exit fees that might make remortgaging less financially beneficial.

You’ve Built Up a Significant Amount of Equity in Your Home

If you’ve been paying off your mortgage for a while, it’s possible that you’ve built up a significant amount of equity in your home. Remortgaging could help you take advantage of this by offering you more competitive rates. With a lower interest rate, you can reduce your monthly repayments and potentially save thousands of pounds over the term of your mortgage. This can also give you access to a wider range of lenders and mortgage deals, giving you more options to choose from.

You Want to Overpay and Your Lender Won’t Let You

If you’ve come into some extra money or want to pay off your mortgage faster, you might want to overpay your mortgage. However, some lenders won’t allow this, which can be frustrating. Remortgaging can be a way around this issue, as it lets you switch to a new lender or mortgage deal that allows overpayments. This can help you reduce the overall size of your mortgage and save money on interest payments in the long term. However, as mentioned before, you need to be aware of any early repayment charges or exit fees in your current deal, which could offset any potential savings from remortgaging.

Remortgaging to Release Equity

If you’ve built up equity in your home, you might be able to release some of that equity by remortgaging. This means taking out a new mortgage for a higher amount than your current mortgage, and using the extra funds for whatever you like.

Here are some scenarios when remortgaging to release equity might make sense:

You Want to Borrow More Money

If you need a lump-sum loan, you might be able to leverage your home’s equity to remortgage for more funds. This could be a good option if you have a large expense coming up, such as a home renovation or wedding. However, be sure to consider the impact of any early repayment charges and the fact that borrowing more money means you’ll be paying interest on a higher amount.

You Want to Consolidate Debt

If you have multiple debts with high-interest rates, remortgaging to release equity could be a way to consolidate those debts into one loan with a lower interest rate. This could help you pay off your debts faster and reduce the amount of interest you pay overall. However, be sure to seek advice from a financial advisor before taking this step.

It’s important to note that remortgaging to release equity isn’t right for everyone. Consider the impact of any early repayment charges, and remember that borrowing more money means you’ll be paying interest on a higher amount.

Remortgaging to a New Lender

If you’re considering remortgaging to a new lender, there are a few things you need to know. First, you’ll need to go through the same application process as you did with your original mortgage. This includes providing documentation on your income and expenses, as well as a property valuation.

When is the Best Time to Remortgage to a New Lender?

Your Current Deal is Coming to an End

This is a good time to look for a new deal that better suits your financial situation. Shop around for the best deal and consider using a mortgage broker to help you find the right lender.

You’re Unhappy with Your Current Lender

If you’re dissatisfied with your current lender’s service or terms, it might be time to switch. Make sure to compare rates and fees to ensure you’re getting the best deal possible.

You Want to Access Different Types of Mortgages

If you’re looking for a mortgage with different features, such as an offset mortgage, a new lender might be a better fit. Be sure to research the different types of mortgages available and compare rates and fees.

It’s important to consider any fees associated with switching to a new lender, such as arrangement fees, valuation fees, and legal fees. Be sure to factor these costs into your calculations to ensure you’re still getting a better deal by switching lenders.

Final Thoughts

Remortgaging your home can be a smart financial move, but it’s important to do your research and consider all your options before making a decision. The best time to remortgage is when you’ll end up in an improved financial situation as a result. Whether you’re looking to save money, release equity, or switch to a new lender, be sure to compare rates and fees to ensure you’re getting the best deal possible.

At Aspire Financial Advisors, we can help you navigate the remortgaging process and find the best deal for your situation. Contact us today to speak with one of our expert advisors.