For most of us our mortgage is our single biggest outgoing. So, it makes sense to occasionally review your options to make sure you are getting the best from it. In many cases that means looking at a remortgage. So, what does that actually mean, and what should you be thinking about.?
What exactly is remortgaging?
When we talk about remortgaging what we usually mean is either moving your current mortgage commitment to another provider or looking to borrow money against property you currently own outright.
Firstly, before we discuss anything else, I want to be clear about the importance of your mortgage. They are not something to be taken lightly and it is absolutely vital that you always understand what any changes mean. When you take out a mortgage it is one of the longest-term commitments you will ever make and will play a part in your life for years to come. Remortgaging then, is a very serious decision. However, it is not one you should shy away from because, as long as you are doing it for the right reasons, it can be a good thing for you financially.
So, is remortgaging right for you and should you consider it?
Is it worth looking at remortgaging?
If you are in a position where you can consider moving your mortgage, then you should at least look at your possibilities. There is absolutely nothing to lose by looking at your options. Just make sure you fully understand what they are get the right advice.
Who should be looking at remortgaging?
There is a temptation to say ‘everyone’ in answer to that question but there are some people who will suit remortgaging better than others. The first question to ask is if you are in a position to look at remortgaging in the first place. In some circumstances you may need to pay a fee for moving your mortgage, and as with all lending you will still need to demonstrate you can afford the new mortgage.
Why do people talk to use about a remortgage?
There are many reasons but 6 of the more common ones are.
- Looking for a better deal
This is very common, but sadly it is also a real opportunity to save money that people sometimes do not explore. Lenders want to attract your business, so remortgaging is usually worth looking at to see what you could save.
- You are on a deal that is about to end
One of the unfortunate results of something as regular as the mortgage payment, is that paying them becomes a habit. Often that means that people just slide from their initial deal onto a standard mortgage. If you are on a mortgage deal that is coming to an end, then it is very likely time to start looking at what is available with better terms.
- Your house has a lot of equity because of an increase in value
Why does this matter? Well, when a mortgage is offered the value of your potential equity in the house contributes to the interest rate. So, if you are in a position where your remortgage will be considerably less than the potential equity in the house, you may be able to access a better deal.
- Your current lender is reluctant to lend you more
It can happen that your current lender is not so keen to change things for a whole host of different reasons. Let’s chat about why and see if there is another option.
- What used to be a good fit is now not so comfortable
As we go through life our financial situation changes. What worked for you when you took the mortgage may now no longer fit your situation. You may have, for example, considerable savings, come into a windfall such as an inheritance, a much higher income. Perhaps you are looking to change to a mortgage that will allow you to pay more off your outstanding amount. As your circumstances change your mortgage should ideally change to fit them.
- You are worried about an endowment mortgage.
If you are still on an endowment mortgage that you took out some time ago it’s worth reviewing it. Some endowments are possibly not going to do what they were originally expected to do, and you may have a considerable shortfall when it comes to paying off your mortgage as it ends.
The important thing is to make sure you are taking the right road. Remortgaging is not for everyone. If you have a very bad credit rating, a low current mortgage value or your circumstances have changed for the worse, then remortgaging may not be the right option or may not be beneficial. That is not to say that it isn’t worth looking at your possibilities, but realistically you may not be able to get a better deal.
As always expert advice is the best guidance so call us and we will see how we can help.