Remortgaging – when is the right time to consider remortgaging?
If you want to borrow money against your present property or want save a significant amount of money on your present mortgage, remortgaging is the way to do it. You can even take out a new policy altogether.
Why and when you should remortgage
There are a number of reasons why you would want to consider remortgaging. For instance, if you’ve been with the same mortgage lender for a relatively long time, then you may be paying more than you need to. By remortgaging – that’s to say renegotiating the original terms of your mortgage agreement – you could save yourself thousands of pounds each year. Whether it’s for home improvements or to pay off some debts, remortgaging is also a way to release equity from the value of your older property or new house.
Naturally, mortgage lenders initially offer fixed-rate mortgages with lower rates of interest for a certain period of time in order to tempt homebuyers. However, once this period ends and the interest rate rises, it can prove to be expensive for the homeowner. This changeover period from low rate to high rate is one time you should consider remortgaging with your present lender or look for a new deal altogether with a different lender.
If you do go ahead with remortgaging, make sure you don’t face a financial penalty for doing so. Some mortgages have a clause whereby if you end the mortgage before a certain time, you face extra charges. If you have at least 25% equity in your home, then you’re in a strong position to get a good remortgage deal; for instance, if you have a £225,000 mortgage outstanding on a property valued at £300,000. As always, it’s best to shop around to see what different lenders are prepared to offer you. Take into account every cost, such as valuation and application fees, as these can lessen the advantages you get elsewhere with remortgaging.
As with your original mortgage, you can take advantage of specific offers that are open to first-time buyers. Whether it’s a variable-rate, fixed-rate or capped-rate mortgage, you’ll also need to decide which type is best for you. Don’t hesitate to seek out individual financial advice if you think it would help.
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