If you’re buying a home, you’re most likely going to need to take out a mortgage. This turns the one-time purchase of a house into an ongoing financial commitment. You pay this loan off over time and only when it’s fully paid off do you have no-strings-attached ownership of the house.
In most cases, mortgages start with fixed terms for a few years but may get higher over time. Some people arrange new mortgage deals when this happens to keep payments low. This is called remortgaging.
The average mortgage deal does not last the full length of a mortgage loan. After that initial deal ends, your interest can rise to the lender’s standard variable rate (SVR). Most people who seek a mortgage do so because they want to control that interest and get it back to manageable levels. As such, you may look to remortgage when your deal is about to end.
There are other reasons to remortgage. For instance, if your home has risen in value, you might be able to get a better deal.
Or you might want a different kind of mortgage, such as a capped one. In some cases, people remortgage to have a more flexible deal that allows them to make excess payments. Some also remortgage to free up some cash for debt consolidation or home improvements.
Costs of Remortgaging
Depending on the term of your mortgage and the particulars of any new deal, the costs can vary. It’s always good to be wary of fees, as some may have large up-front costs.
Similarly, if you have early repayment fees on your current mortgage, you may need to pay that in order to switch to a different deal if your current deal has not yet ended.
Should You Remortgage?
Remortgaging can help you find a better deal, but it should be done with care to make sure it isn’t outweighed by the costs. If you have a low equity or high loan-to-value ratio, it might be difficult to get a much better deal than you’re on. Similarly, if the value of the property has dropped, you might not get a better offer either.
How To Make Sure You Get The Best Deal With A Remortgage
If you believe you’re in a good position the remortgage and the benefits outweigh the potential costs of fees, then you should consider getting in touch with a mortgage advisor. They can take a closer look at your existing mortgage deal, the factors of your home and finances, and if there are any good deals on the market that are likely to be available to you.
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