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What is Remortgaging?
Remortgaging is a process of switching from your current mortgage deal to another mortgage deal. This can be done with your current lender, or you can switch to a different lender if they can provide you with a better deal that suits your financial needs.
Why do people Remortgage?
There are various reasons as to why people remortgage, for example, to take out a larger loan with a property as security to pay off other loans or debts accruing interest. Or to complete home improvements to add value to the property.
Typically, the reason people remortgage is due their current fixed term mortgage rate coming to an end and they are looking to find a better deal to bring down monthly payments or take advantage of lower interest rates.
As your fixed mortgage deal comes to an end, it’s a good idea to review your current deal to ensure it still meets your needs and requirements to avoid an increase in your monthly payments.
Usually, fixed term mortgage agreements are in place for a short amount of time – often two to five years. After this, lenders tend to move homeowners to their Standard Variable Rate which can often work out as more expensive monthly.
Many people assume that remortgaging means you incur more debt. While this can be the case if you are remortgaging to release equity from your property, meaning you are borrowing more money to spend on things like home improvements. For the majority of people, remortgaging is a solution to bringing down monthly mortgage costs.
It might seem like a really complicated and daunting process, but really it’s just switching to a cheaper lender. You might compare remortgaging to shopping around for a better deal on your car insurance or a phone contract – it really can be as simple as that!