Many homeowners may be unsure about when is the right time to look for a new mortgage. Is the time right now or should you remain with your current mortgage? It’s a very important decision that could impact your finances by thousands of pounds every year.
Remortgaging is the process of getting a new mortgage on your existing property, either with your current lender (product transfer) or a new lender. More often than not, the main reason to remortgage is to save yourself some money, but it’s not the only one.
But before you look at the ‘when’, you need first to consider the ‘why’. Is your current deal about to come to an end or has it already finished and you’ve been moved to your lender’s costly standard variable rate (SVR)? Are you simply looking to save money, or do you want to release some of the equity in your home to make changes to it, such as renovations or adding an extension?
Or, do you want to switch from an interest-only to a repayment mortgage?
Whatever your reason for wanting to remortgage, it’s important to obtain qualified advice to see if remortgaging is the best option for you and to help you identify the best mortgage deal to meet your needs. There’s no right answer for everyone, but we’ve provided five reasons why remortgaging now could save you money or make you money over the long term.
- I’M NEARING THE END OF MY PROMOTIONAL PERIOD
You have a fixed or tracker mortgage and you’re coming close to the end of the initial promotional period (often two, three or five years). If you don’t find a new deal, you’ll automatically revert to your lender’s SVR when your promotional period ends.
This could be considerably higher than your current rate, and could cost you thousands of pounds in additional interest over the lifetime of the mortgage. Instead of remaining with your mortgage and accepting the higher SVR, now would be a good time to discuss a new mortgage deal. - I WANT TO TAKE ADVANTAGE OF HISTORICALLY LOW MORTGAGE RATES
The Bank of England base rate is still historically low. That means borrowing money now enables you to take advantage of lower-than normal mortgage rates. Even if you’ll pay a fee to exit your current deal early, for some people it could be worth doing so, to secure a rate at a lower level. - I WANT TO REMORTGAGE WHILE PROPERTY PRICES ARE RISING
Why? Because your loan-to-value ratio will be lower. In other words, the amount you need to borrow will be a smaller percentage of the market value of your home. If prices fall again, your loan to value (LTV) ratio becomes higher and you may not have access to the best mortgage deals. - MY FINANCIAL SITUATION HAS CHANGED
If your financial situation has changed significantly since you chose your current mortgage, you might want to explore other options. Perhaps you have more cash available now, and you’d like a mortgage that allows you to make overpayments as and when you want to. Or perhaps you need to improve your cash flow and need a mortgage with flexible repayments. - I WANT TO RAISE CAPITAL
In some situations, you might want to borrow more against your home. For example, you might want to build an extension, pay off unsecured debts or carry out home improvements that will increase the value of your home. Or you might want to buy a second property as a buy-to-let. Remortgaging could help you to raise the capital to do this.
