Remortgaging your home would involve you taking out a new mortgage on a residential property you already own. In the UK, roughly a third of home loans made are remortgages, Which? explains – and there are many good reasons why you might want to go down the remortgaging route yourself.
You might want to free up extra funds, or could have simply become dissatisfied with the terms of your existing mortgage – but we urge you to answer the following questions before you remortgage.
Is your current mortgage about to expire?
With many attractive mortgages – whether fixed-rate, tracker or discount mortgages – lasting only about two to five years, your own loan’s expiry date might be coming up. As it arrives, your lender will switch you to its standard variable rate, commonly called the SVR.
Over time, remaining on that rate could hit you with thousands of pounds more to pay compared to what would be the case if you instead took up a fixed-rate mortgage.
Have you built up equity in your property?
In repaying your existing mortgage, you could have built up equity potentially allowing you to remortgage at a more generous loan-to-value (LTV) ratio than what your original loan allowed. In other words, you could now be entitled to cheaper deals.
Therefore, if you have a long history of reliably repaying your mortgage, you could be justified in investigating which good-value deals are now available to you.
Have your personal circumstances changed since you last mortgaged?
Naturally, times change, and your own circumstances could change with them. If your life situation is indeed pretty different to how it was when you originally remortgaged, this could have affected the mortgage deals to which you are now entitled.
If you have taken up a higher-paying job, you might want a mortgage allowing you to make overpayments. However, if your financial future is looking choppy, you might prefer to switch to a mortgage where the rate will be fixed for a relatively long period.
Do you fear that interest rates could increase?
This is an understandable worry to have, though MoneySavingExpert.com points out that, if you notice new customers being offered dauntingly high rates, it doesn’t strictly follow that your own repayment rate will be impacted.
If you’re concerned about the Bank of England’s base rate, increases in this could indeed affect particular mortgages, so you could beneficially pin down a fixed-rate deal ahead of time.
Would you like more money to fund your next home improvement?
Your current lender might have barred you from borrowing extra money, or you could simply dislike that lender’s terms. However, by remortgaging to a new lender, you could potentially – and inexpensively – raise money on low rates.
Though you will have to tell the new lender what that borrowed money will be spent on, improving your home is one of the most often acceptable incentives to borrow. Roofers in Newcastle, for example, could provide quotes of which the lender might want to see the evidence.