When it’s a good idea to remortgage
There are many reasons why UK homeowners remortgage.
The most common is that most mortgages come with an initial deal period, which is usually between 1 and 5 years. After this point, your monthly repayments tend to go up significantly.
The good news is you could save a significant amount of money each year by remortgaging when your current deal expires rather than sticking with the same mortgage.
It’s best to start thinking about remortgaging 3-4 months in advance of the end of your deal period. This allows time for the collection of all the documents you’ll need, and for you to talk to a mortgage broker to get advice on the best deal available for you.
Here are the top reasons our customers remortgage:
Your fixed deal is about to end
Whether you have a fixed or variable rate mortgage, if it has a deal period that’s coming to an end it’s important to remortgage before you reach the end of your fixed-rate period – otherwise you’ll generally end up paying significantly more.
You want a lower interest rate
If you remortgage and get a lower interest rate on your new mortgage, you could save money even if you have to pay an Early Repayment Charge. A broker will be able to advise you on whether this is the case for you, but if interest rates are much lower than when you took out your mortgage, it could make sense to switch even if it incurs additional costs.
You’re worried about interest rates going up
If you’re worried about rates going up and want to lock in a particular rate for a long period, you may choose to remortgage to get onto a fixed rate that will be lower than you anticipate it being in 3-5 years time.
You want to pay your mortgage down and your lender won’t allow you to
Some borrowers find their mortgage isn’t as flexible as they would now like. It’s natural that priorities should change over time, and so some borrowers will remortage in order to be on a more flexible arrangement that allows a certain number of missed payments or overpayments.
You want to switch from interest only to repayment, or vice versa
As the market changes over time, so do borrowers preferences. If drops in interest rates are anticipated more people tend to look at variable rate mortgages as a viable option, but increases are on the horizon borrowers tend to look to fixed rate mortgages in order to protect themselves.
You want to borrow more on your mortgage
Some people decide to borrow against their mortgage for big expenses such as home improvements. If this is the case, and you have equity in your home, you can remortgage to fund the project.
Your home’s value has increased significantly
If this is the case, you could remortgage with a much lower Loan To Value, allowing you to access lower interest rates. This is often the case if you took a mortgage with a high loan to value, e.g. 90%+. This means the lender’s risk was much bigger than if you were borrowing at 70% LTV, so they charge higher rates. If property prices have gone up and made a difference to your LTV you may be able to access a much lower rate.