Is Remortgaging Beneficial?
If your fixed rate mortgage coming to an end, it’s probably a good idea to do some research around the process of remortgaging to be clear on what it is, what it involves and if you could benefit.
What exactly is Remortgaging?
Remortgaging is when a homeowner changes their current mortgage deal to another, often to borrow more money or to bring down monthly payments.
Most people remortgage to take advantage of lower interest rates or alternative deals which then enable them to bring their monthly costs down. Some people remortgage their home to take out a bigger loan to pay debt off, commence home improvements, or because they need some extra cash.
It’s easy to get overwhelmed with the idea of remortgaging but when you liken it to shopping around for car insurance or your phone contract – it really can be that simple!
A quick look at some of the benefits:
Bringing your monthly payments down
There may be costs involved when remortgaging your house but it might be worth considering whether the money you spend could actually save you more money in the long run.
If you are remortgaging you house to pay off other debts, this could also save you money monthly as you will no longer be accruing interest charges on another loan.
Lower interest rates than Standard Variable Rate mortgages
This could be another way to save money on a monthly basis. Typically when fixed rate mortgages come to an end, homeowners are put onto a Standard Variable Rate (SVR) mortgage which can increase monthly payments.
Flexibility
With some mortgages, there is no option to have mortgage holidays. Remortgaging can mean you are with a lender that is more flexible with when you pay your mortgage.
You could benefit from a more flexible mortgage agreement for many reasons, for example: travelling or holidays, going back into education or getting a new job meaning you require more flexibility on your mortgage payments. Remortgaging could help you find a lender that will allow you to do this, if it’s right for you.
Allowing overpayments
It’s common that homeowner’s circumstances change over time after getting their first mortgage deal. This might be a pay rise due to a promotion at work or inheriting some money, and many people decide they want to put that lump sum towards paying off their mortgage in full. However, some lenders don’t allow overpayments, or only allow small amounts. This can mean you are paying the same amount of money monthly over a certain period of time.
As with everything there are pros and cons to remortgaging, that is why it’s important to research before jumping in head first. Although there are benefits to be had, there are costs involved too.