A question we receive often is: Should I remortgage my home? It’s a great to inquire about!
Very rarely , you get a loan and stay with the same mortgage for the entire term (i.e. 30 years) i.e. 30 years until it’s all paid back and you’re no longer mortgage-free (oh it’s a dream!). In reality, it’s likely that you’ll be trying to refinance to benefit from an offer that is more suited to your budget and needs.
This guide will help you decide if it is the ideal moment to refinance your mortgage. We’ll go over everything from timingsto types of mortgages, the risks and rewards, as well as how remortgaging is done.
What is the term “remortgage?
A remortgage term is used to arrange the mortgage for a home which you currently own however you are either:
Are you looking to change your mortgage provider of choice to a new lender
You may want to get a loan that is greater than your mortgage such as, say, raising more capital to fund the cost of a remodel even if you’re with the same lender.
What are the reasons I should mortgage my house?
There are many reasons you could want to remortgage your home Here are a few of the most popular reasons to refinance your house…
The current deal is set to expire.
If your current contract is over Your lender will then put you on the SVR, which is the standard variable rate (SVR). It’s likely to be more expensive than your previous interest rate, and you’ll likely pay more every month.
Start looking for deals that are better, at least three to six months before the date your current rate is due to expire. Talk to one of our advisors, who will help you change to a better offer.
Equity release
While you pay the monthly mortgage payment gradually paying off your debt while building equity. After a time you could decide to transfer this equity into an opportunity to get a new loan.
For instance, if your home is valued at £400,000, and you owe £200,000 to your mortgage, that means that you have £200,000 of home equity. You can release it in full or in a percentage of the equity you have.
When looking to remortgage Surrey make sure you get expert advice…
The value of property has increased
If your home’s value has increased since the time you taken out a mortgage, you qualify for less interest, which will mean less monthly payments. It’s worth considering to ensure that you’re not spending more money than you ought to.
You’re paying a high interest rate
Based on the date you took out your mortgage or the deal you went for, you might find that the current rate is more expensive than it is required to be. If you’ve seen a cheaper offer on the market, you might decide that the expenses associated when you mortgage remortgage (such as an early repayment cost) are worth it because of the savings you’ll accrue each month.
Do you want to overpay?
It is possible that you have a better pay job or been granted a loan, which means you’re making more money and are able to afford more for your mortgage payments. This is a great thing! But there are lenders that will not allow overpayments, therefore you might want to switch to a different lender.
This could also mean that you’ll have to pay an early repayment fee However, we’ll be able to advise whether it’s still advantageous to change.
Remortgaging for home improvement or extension
A home mortgage is the perfect way to complete those home improvements that you’ve thought about for a long time. If it’s a gorgeous contemporary kitchen or an extra space to create a comfortable work space, you could be able release the equity you’ve accumulated to finance these projects. You could also improve the value of your house while doing it!
Remortgaging to purchase another property
If you have enough equity in your house, you may decide to let it go to purchase a new home, for instance, an additional holiday home. The cash can be used for deposit financing or to purchase a new home in full. In the event of the latter it is important to determine whether you’re able paying off two loans at the simultaneously.
Remortgaging Buy-tolet
If you’re looking to purchase another property in order for some of the properties you own to be let and rented out, you’ll need to look at a different process for mortgage in comparison to buying another residence. Buy-to-let mortgages are based on the amount of income you’ll earn from your investment.
What are the advantages of refinancing?
There are many advantages for remortgaging your home, which includes…
Investigating all the available alternatives for mortgages that are competitive will allow you to choose a mortgage that is suitable for your needs. You can reduce costs in the event that an interest rate that is lower be available.
If you are a homeowner currently paying the SVR or Standard Variable Rate (SVR) You have the possibility of reducing the amount you pay.
Remortgaging can be a great option for homeowners who want to renovate, because it lets you get a large amount of money , and is more likely to offer better rates of interest than the high-street personal loans.
Based on the person who manages the project’s financial financing It could be possible for the value that your renovation brings can be utilized to secure you a better mortgage.
When is the best time to refinance?
There are certain periods in the present and certain situations in which it is advisable to think about refinancing. This includes…
If you’re currently in a contract, it’s set to expire
When the value of your house has increased
If you’re looking to make a higher payment on your mortgage
If you’re ready to move from an interest-only loan to an amortizing mortgage