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Thinking about remortgaging? While this can seem like a straightforward process to some, it’s easy to get confused with all the potential options. You might not be 100% sure that this is the best way forward or whether there’s a better option for what you are looking to achieve.
With a remortgage, you simply take out either a different or a new mortgage on the property you own. It could be through your current lender, or you might want to switch to a new lender for a more suitable product.
There are many reasons to remortgage, including but not limited to:
- Securing a better rate
- Releasing cash from your home, perhaps for debt consolidation or home improvement
- Reducing your mortgage term
Benefits Of A Remortgage
There are a variety of reasons why remortgaging could be the right choice for you and one of the most popular reasons for doing this is going to be securing a better interest rate. This could be with a new lender or a provider that you are already with. Typically, individuals will do this when a current fixed-rate mortgage is nearing an end as it can save money on monthly repayments.
But here are other benefits too. It may allow you to borrow more money. The actual maximum loan to value ratio will largely depend on how you are going to use the funds. For instance, you could be using it to pay off existing debts, you might be keen to purchase another property or look to make further improvements to your current home
The risk from the lender is limited by placing a cap on the amount they will lend. This is based on the value of the property against the amount you borrow (loan to value).
Downsizing Or Let To Buy Properties
This is another popular reason for seeking a remortgage because by remortgaging, further equity is released which can allow you to gain a new mortgage product for another home whilst keeping your current home for investment.
When Is The Right Time To Remortgage?
This largely depends on why you’re looking for a remortgage because there are a few factors and variables. For instance, you want to make sure that you look at the lender’s standard variable rate. This is the point that typical mortgages will arrive at after the initial rate period. You should therefore consider exploring new mortgage possibilities approximately 14 weeks before the initial rate period ends as it can take a while to find a deal that is right for you.
Should You Remortgage Right Now?
If you’re wondering whether you should remortgage right now, it’s important to keep in mind penalties or early repayment charges (ERCs). Penalties are always going to increase the cost. However, if penalties aren’t going to be an issue then it does make sense to lock in a deal. The reason for this is due to the fact that it’s possible that the rates will rise. By waiting, you could end up with higher rates which is something that you definitely want to avoid.
While you can remortgage at virtually any time, you may find that you have to contend with extra charges from your lender. If you do want to remortgage early, then you typically need to wait for at least six months of living in your home, before you can pursue this option. That said, there are exceptions to this rule. That includes when a property is inherited or if a sibling is buying another member of their family out. It can be quite tricky to know exactly when it’s going to be the right time. So, make sure you get expert advice before pursuing this possibility.
How Often Should You Remortgage?
You might be wondering how often you should remortgage and you might hear that you should do it every two years. However, this isn’t necessarily true. This will only be the case if that’s the length for your fixed-rate period. While two years is the typical period, there are long and short-term possibilities on the market. However, you will usually save if you change before the standard variable rate kicks in.
You should definitely make sure that you are exploring remortgaging whenever your introductory rate is coming to an end. These periods can last anywhere between two and ten years. After this, remortgaging can help you achieve a favourable incentive period once more.
Discover Whether A Remortgage Is Right For You
Are you wondering whether a remortgage is the right choice for you? If so, don’t hesitate to contact us today and a member of our team will be happy to provide the advice you need.