Remortgaging your home: What you need to know and what to look out for

Many homeowners sometimes decide to remortgage their home at some point during their mortgage. This is typically done to get a better deal than the one you are currently in. Remortgaging your home can help you save money in the long run. You may also choose to remortgage to release equity and free up cash. Before remortgaging there are some things you need to know and things you should look out for.

What is remortgaging?

First, it is important to understand why remortgaging may be a good option and what remortgaging actually entails. Remortgaging is basically working with your lender and reviewing your current financial situation in order to work out a better deal.

Why should I think about remortgaging my home?

People remortgage for a variety of reasons, the main reason being to save money. Many also remortgage when their current mortgage deal is about to end. When the original deal comes to an end, your lender will put you on its standard variable rate (SVR), which is almost always a higher rate than your introductory offer.

Financial experts in the industry recommend looking around or speaking with a mortgage broker service 14 days before your deal ends. If you are considering remortgaging your home, make sure to give yourself enough time to do so.

Additionally, some may remortgage if their property values have risen since their mortgage began. In this case, remortgaging can help you get the best rate for your property since the homeowner may then be eligible for a lower mortgage rate. No matter what the reason for remortgaging, it may be best to speak with a professional and experienced mortgage broker in order to find the best deals and allow the process to go smoothly.

Here are some things those looking to remortgage should take into account:

  • If your home has decreased in value since you began your mortgage, then borrowing a lump sum in this instance could mean you’ll end up paying more than the value of your house over time. It is important to be aware of whether remortgaging will suit your financial goals in the long run.
  • If your financial situation has significantly become worse since your initial purchase, your home it is likely you won’t get approved for a better rate.
  • There may be fees when switching lenders. There is a likelihood that there will be extra costs when applying for a new mortgage with a different provider.
  • Ending a current agreement will likely lead to some fees, depending on the lender. This is an early repayment charge. Make sure you can afford any added fees when looking to remortgage.

Remortgages sky rocketed in the UK last year. Based on the current situation of COVID-19 throughout the country, it is likely this trend will continue. 2019 saw the highest number of remortgages in history, with 1.4 million borrowers switching to obtain a better deal.

This points to the fact that customer engagement was fairly high. Remortgages may continue to rise through 2022 as interest rates remain at an all-time low. Despite the fact that remortgages may continue to rise, it is best to understand how remortgaging may affect your situation. You should also assess if you can afford to remortgage at all. Speaking with a licensed and knowledgable mortgage broker can greatly increase your chances of obtaining a better rate.

Contact us today to find out if you could save money on a better mortgage deal.