Remortgaging is the process of getting a new mortgage on a home you already own. Either to pay off the old one or to obtain a loan against it. Remortgaging is typically done by homeowners to save money, but you might also do it to hedge against rising interest rates. There are various reasons why you may seek to remortgage your home, which can have really positive benefits on you.
In this article, we will discuss some of the benefits you may come across from remortgaging your home.
Remortgaging is the process by which homeowners alter their mortgage agreement or require a bigger loan to access more of their home’s equity. The fixed or initial low rate on many mortgages expires after a certain period of time. After this time period, switching arrangements lowers the cost of a mortgage.
Homeowners with existing mortgages who have finished the introductory period and are now on the provider’s standard variable rate may choose to remortgage. For a lot of homeowners, they will remortgage to release equity in their property for more money than the initial mortgage.
Benefits Of Remortgaging Your Home
Pay Off Your Mortgage Quicker
If you’ve suddenly come into more money, such an inheritance, you might be able to make extra payments or perhaps pay off your mortgage in full.
Remortgaging could help you avoid exit fees and early repayment penalties of thousands of dollars. You’ll also save money on interest charges if you pay it off sooner.
Borrow More Money
Perhaps your existing lender has declined to lend you additional funds or its terms are unfavorable. You might be able to raise money on more favorable terms by remortgaging to a different lender. Keep in mind to factor in all the costs to determine whether it actually is less expensive than other borrowing options.
The new lender will inquire about the purpose of the additional funds. Home renovations and debt repayment are the two most popularly accepted justifications for fundraising. Just be aware that if you are borrowing a sizable sum, your lender may seek proof, such as builder quotes or documentation showing that you have settled your debts.
Lower Mortgage Rates
When your introductory rate expires, your mortgage’s interest rate will increase. Over the course of the loan, this may result in interest additions of hundreds of dollars. Thus, if you do decide to remortgage onto either a variable or lower fixed rate mortgage, this will lower your monthly payments.
Your Home’s Value Has Increased
You might discover that you now fall into a lower loan-to-value band and are thus qualified for substantially lower rates. This is true, when the value of your property has increased quickly after you took out your mortgage.
Have More Control Over Your Finances
Due to a rise or drop in your salary, you could occasionally need additional flexibility with your mortgage. Remortgaging can be your best choice because changes in your income may have an impact on how much you can afford to pay each month.
Depending on how long you have had your mortgage, you may be able to find a better deal to suit your financial needs.
Is Remortgaging For Everyone?
Remortgaging your home isn’t for everyone. Due to your debt to income ratio, you can occasionally not be qualified to remortgage with some lenders. Prior to remortgaging, it is always preferable to pay off any remaining debt you might have.
Remortgaging entails a number of fees, including valuation fees, booking fees, agreement fees, and other fees. Additionally, if you are ending your current arrangement early, you might have to pay an early payback fee.
If you do wish to remortgage your home, you need to give yourself plenty of time to do so. It can take around 3 months for a remortgage to go through. Yet, that isn’t incorporating the time you need to look into the different types of mortgages that are on offer and available to you as well.
Remortgaging your home can have various benefits to you. From allowing you to pay off your mortgage quicker and securing lower and better rates for your mortgage.
If you are considering remortgaging your home, then we would recommend that you speak with an adviser. As they will be able to point you in the right direction on what will be the best option for you and your financial circumstances.
We hope this article has been helpful. Now you should understand the main benefits to you when remortgaging your home.