For many homeowners, re-mortgaging can help to save a tidy sum of money by reducing their monthly repayments, or even free-up some of the cash built up in equity in their home. These are the two main reasons why you might want to re-mortgage.
If freeing up equity is your thing, whether that’s to fund a new car, a dream holiday or just top-up your holiday income, we’ve got this covered in our guide to re-mortgaging and equity release.
However, if getting a better deal and reducing your monthly mortgage payments is what you’re looking to achieve, then read on for some handy tips and ideas about how to find and access the best deals, which could help save you a lot of money in the long run.
There are several reasons why you might want to re-mortgage.
As we said earlier in this guide, you may want to re-mortgage to free up some of the equity you’ve built up in your home over the years.
This is a viable option to boost your income, particularly if the value of your home has increased. However, there are other reasons, including:
Your current mortgage deal is coming to an end
Most lenders offer special introductory deals to entice new customers to borrow from them. The best rates they offer are usually for a fixed period, usually two, three or five years, after which, your mortgage will revert to a higher rate of interest. However, it is possible to re-mortgage to a new lender, with a cheaper rate, before your introductory rate comes to an end. Don’t leave it too late, though – allow about three months to find and secure a re-mortgage deal.
Your home has increased in value
If the value of your home has increased since you took out your mortgage, it might help reduce the loan-to-value threshold of your property and make you eligible for lower rates of interest. Again, an experienced mortgage broker will be able to work out whether this is a good option for you and connect you with the lenders offering the best deals to suit your circumstances.
You’re after a better rate
If you’re languishing on your lender’s Standard Variable Rate (SVR), which is usually a lot higher than some of the best deals on the market, then it can sometimes pay to switch. In the long run, it can sometimes also be cheaper to switch from a mortgage you are tied into for a set period, even if there are exit or release fees involved if you can find a better deal. If you are thinking of doing this, sit down with an experienced mortgage broker who will be able to do the sums for you to work out whether it’s worth doing.
You want better terms
Sometimes, it’s not just the interest rate that you need to take into consideration when it comes to your mortgage. You might find that your existing deal is quite restrictive when it comes to making overpayments or paying it off early. Although you may be subject to early redemption or overpayment charges, re-mortgaging can still sometimes work out cheaper in the long run if you can find a less restrictive deal. You may even be able to reduce the loan size if you have additional cash saved up and get a better rate of interest too. Bonus!
You want to increase the amount you’ve borrowed
Borrowing extra and securing it against your home can get you access to cash quickly and, in some circumstances, might be worth exploring. However, it might not be the best – or cheapest way – to get credit, so if you are thinking of increasing the amount of mortgage you have borrowed, it’s worth getting some professional advice from an experienced mortgage broker, to work through your options. Just be careful if you are thinking of going down this route.
If your mortgage is small, if you would be subject to high early repayment charges, if your financial circumstances have changed, or if your home has dropped in value, then re-mortgaging might not be the best option for you. As with everything related to your mortgage, it’s important to seek professional advice, as buying and owning is home is a big responsibility and commitment and there are so many things to consider. Remember, if you take out a mortgage and cannot afford the repayments, it could put your home at risk, so make sure you seek the right advice before taking the plunge.