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

It is no secret that the effects of COVID-19 and lockdown throughout the UK were felt by homeowners across the country. As talk of extensions for mortgage holidays ramps up, and many face uncertainty as normal life slowly resumes, many are looking at remortgaging as a financial option. However, there are a few things homeowners looking to remortgage should be aware of.

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. 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. 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 worsened since you purchased your home it is likely you won’t get approved for a better rate.
  • There may be fees may be involved when switching lenders. There is a likelihood that there will be a cost involved in applying for a new mortgage with a different provider.
  • Ending a current agreement will likely lead to some fees, depending on the lender. These are known as an early repayment charge. Make sure you can afford any added fees when looking to remortgage.

Remortgages sky rocketed in the UK last year, and based on the current situation 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. Considering many lenders are looking to be able to keep customers, remortgages may continue to rise through 2020 as people look to get better rates to better secure their financial futures. Despite the fact that remortgages may soon be on the rise, it is best to understand how remortgaging may affect your situation, and if you can afford to remortgage at all. Speaking with a licensed and knowledgable mortgage brokerage service 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.