Why should I remortgage?
Your current mortgage deal is coming to an end
Fixed-rate, tracker or discount mortgages often have a length of 2 to 5 years. When your mortgage term is coming to an end, your lender will then transfer you to their standard variable rate (SVR). When this happens, you are more likely to be paying significantly more than before, and therefore may want to consider remortgaging your property to gain a cheaper rate. You should start the search for a new deal between 3-6 months before your current term ends, to ensure you don’t get stuck with your current lender’s SVR.The value of your home has increased
Since taking out your mortgage, the value of your property may have increased due to being in a popular location, supply and demand, or home improvements such as kitchen remodelling or garden landscaping. If this is the case, you may find that you are now in a lower loan-to-value band, meaning that you would now be eligible for lower rates.You are searching for better rates
If you are searching for better rates, there are a few things you may want to consider first. If you are tied into an initial deal, you will typically need to pay an early repayment charge, which can amount to quite a large sum, along with an exit or release fee. Finding a better rate can result in saving money, however, you should make sure to weigh up all the options carefully before making any final decisions.You want to borrow more
If you are trying to borrow more, and your current lender does not allow it, or the terms are not very favourable, remortgaging may be a good option. However, be sure to do your calculations and consider all fees before going ahead to make sure it is the cheapest form of borrowing for your circumstances.You’ve inherited a large sum of money
Many fixed-rate mortgage deals allow for overpayments but will restrict how much you are able to pay each year. If you have inherited a large sum of money, and are looking to put it all towards your mortgage, this can be frustrating and you may wish to remortgage. Remortgaging will allow you to use the full sum of your inheritance, with the possibility of securing lower rates for the remaining balance of your mortgage. However, be aware that you may have to pay an early repayment charge to your current lender if you’re remortgaging.What to do before remortgaging
- Plan 3-6 months before your current deal expires
- Check for any early repayment charges and exit fees
- Use a mortgage calculator to find out how much you can borrow based on your current circumstances.
- Speak to a mortgage broker for more guidance.
