Making the decision as to whether you should remortgage your home is not easy. Nevertheless, the whole thing can be simplified by asking yourself one important question:
Will refinancing your home save your money and reduce your outgoings?
If it is possible to switch to a better deal and save significant sums of money, refinancing is the obvious choice. Even when taking into account potential early exit fees and arrangement fees for the new loan, you could still reduce your immediate and long-term outgoings.
Nevertheless, the potential complications involved in refinancing can be off-putting for many. As can deciding when the precise moment comes to go ahead and refinance.
Why Should I Remortgage?
Some motivations for remortgaging a property are more obvious than others. Every refinance customer has their own unique priorities and objectives, though the following represent the most common reasons for remortgaging in the UK:
1. Your current mortgage deal (or introductory rate) is coming to an end and you would like to start a new deal elsewhere.
2. You want to switch to a new provider who has offered you a much lower rate of interest than your current lender.
3. You would like to release some of the equity tied up in your home in a convenient and cost-effective way.
4. You intend to pay off your mortgage earlier than initially planned to save money on the life of the balance.
5. You want to switch from an interest-only mortgage to a standard repayment mortgage.
6. You are in any way dissatisfied with your current lender and would like to switch to a new deal elsewhere.
Far too many mortgage customers across the UK simply ‘accept’ that they are locked into a deal they are not happy with, without realising how quick and easy it can be to switch to a new deal with a new provider.
If you are in any way dissatisfied with your current mortgage or believe you could save money by switching, it is in your best interests to do so at the earliest possible juncture.
When Should I Remortgage?
In any instance where remortgaging could save you money, the sensible time to do so is as quickly as possible. The longer you remain locked into an uncompetitive deal, the more money you needlessly waste.
This is why one of the most common times to shop for a remortgage is when the introductory period of an existing mortgage comes to an end.
In a working example, your lender may offer you an introductory rate of 2% for the first 36 months, after which your loan will shift to the bank’s standard 5% variable rate of interest. In which case, switching to a new provider towards the end of this initial 36-month period could mean starting a new loan with a new introductory (or permanent) rate of interest far lower than 5%.
Refinance with the right deal at the right time and it is possible to save thousands of pounds a year for the entire life of your mortgage.
If your intention is to raise funds for a property improvement project or a major expense, it is simply a case of establishing the affordability or otherwise of the loan.
As you cannot always rely on any specific bank or lender to provide the objective and impartial advice you need, it is advisable to consult with an independent broker to discuss the available options.
Use an online remortgage calculator to assess the affordability of the loan you need, before booking an obligation-free consultation to discuss the next step. If you choose to go ahead, your broker will handle all aspects of the market comparison and refinance negotiation process on your behalf.