Most mortgages are arranged on a fixed-rate deal, which means that your monthly mortgage payments are fixed for a specific period of time. When this fixed rate ends the mortgage will automatically move onto the lender’s standard variable rate (SVR) which will usually be a higher interest rate than your current fixed rate.
Fixed rate deals are extremely popular with lenders as they lock you in for a period time, and offer competitive rates to lure you away from your current lender once your initial fixed rate deal ends.
What is remortgaging?
Remortgaging is the process of moving your current mortgage to a new lender. Your mortgage broker will be able to search the whole of the market to source you the best deal for your personal circumstances.
5 reasons to remortgage
There are many reasons why people choose to remortgage, here are 5 great reasons:
- Home improvements: Have you ever heard the saying; ‘Your home is never really finished’? Well, remortgaging to make home improvements can certainly help with that. The equity you have in your home can be raised when remortgaging to get you that new kitchen you’ve been dreaming of. Of course, this will mean your monthly mortgage payments will increase, however, your mortgage broker will be on hand to make sure it’s affordable for you.
- To get a better mortgage rate: The current mortgage market is extremely competitive, interest rates are offer that could help you reduce your monthly mortgage payments by quite a fair chunk. You could remortgage to a new lender or remain with your current lender if you can obtain an extremely competitive rate.
- Reduce the mortgage term: A mortgage will be, for most people, the biggest financial debt they take on in their lifetime. So, paying it off is a huge achievement in itself. If you have had an increase in income then this may mean you’ll be able to afford to have a higher monthly mortgage payment. Reducing the mortgage term will mean your mortgage is paid off quicker, but the monthly payments will increase.
- Raising capital: One reason many people choose to remortgage is that they’re planning to purchase a buy to let property to increase their income. Equity is the difference between the current value of your property and your outstanding mortgage. Releasing equity in your property can then be used as a deposit for a buy to let purchase
- More flexible mortgage terms: Your situation may have changed over the years, so changing your mortgage accordingly could be a wise decision. For example, if your income is variable, having flexibility with the monthly mortgage payment or having payment holidays may help with your budgeting.
There may be times that remortgaging isn’t the best option for you as well, it isn’t all positives. Everybody’s situation is different so speak to one of our CeMAP qualified mortgage advisers who will be on hand to advise on the best way forward for you.
When you might not want to remortgage:
- You’re in the middle of your current fixed-rate term so you’ll be hit with early repayment charges.
- You have poor credit history, especially if this has deteriorated since organising your current mortgage.
- Your financial situation has changed either with a reduced income, you have become self-employed or have started your own business.
- You have divorced or separated from your partner whose income was being used for your original mortgage.
Here at Mortgagez, our team of fully qualified mortgage advisers is on hand to help you every step of the way in obtaining a new mortgage, and our service won’t cost you a penny when you go via our online portal. Visit our website today and obtain a quick quote with our online mortgage rate tool to see how much you could save on your next mortgage.
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PLEASE NOTE: Article written 20th January 2022. Information contained within this article is likely to change and therefore should not be relied upon or form part of any form of decision making without seeking professional advice. *
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.
Article written: January 2022 200122 MZ000244
