Remortgaging – is it a good idea?
Remortgaging means switching your mortgage to a new lender or arranging a new mortgage rate with your current lender.
At Friends Capital, we find most people fit into one or more of the following scenarios, which one are you?
- My current mortgage term is about to expire >
- I need to borrow more money >
- I want a cheaper rate / to spend less each month >
- I want to pay my mortgage off quicker >
My current mortgage term is about to expire
Lots of lenders will only offer a fixed-rate mortgage for a set number of years – usually five or less. After this, they’ll move you onto their Standard Variable Rate mortgage, which is twice as expensive on average. The move to the SVR mortgage will happen automatically so be prepared to switch, or you’ll be paying more money!
I need to borrow money
Remortgaging to release equity in your property can get you a large lump sum. You can then use this money for other purposes; common reasons include home improvements, consolidating other debts or a new car purchase. Borrowing more money will increase your debt and monthly repayments so please make sure you check your affordability.
I want to spend less each month
Paying less each month and switching to a cheaper rate is the most common reason. Finding a lower rate will reduce your monthly payments and leave you with more disposable income. Be careful remortgaging too early as some lenders will have an early repayment charge.
Explore your options. Check out more information on remortgaging.
I want to pay my mortgage off quicker
Remortgaging is an excellent way of getting your current deal to match your circumstances. If you have more disposable income then when you initially took out your mortgage, you may decide to reduce the mortgage term and pay it off quicker. Alternatively, you make require a flexible mortgage that allows you to overpay each month. However, not all mortgages allow you to do this; lenders want you as a customer for as long as possible so blocking overpayments is an efficient way of doing that. A remortgage customer is a desirable customer type, especially to a new lender, so it’s your chance to negotiate and get terms that suit you.
Next steps to getting remortgage ready:
- Get an estimated realistic valuation of your property
- Work out how much is left on your current mortgage
- Look at when your current mortgage deal is due to expire
- Talk to Friends Capital and get the best deal possible.