Ever tried looking re-mortgaging up in the dictionary? We have and here is what we came up with:
- Verb: take out another or a different kind of mortgage on (a property).
“he re-mortgaged their home to help meet the growing bills”
- Noun: a different or additional mortgage.
“a re-mortgage is one of the cheapest ways of borrowing money”
Whether you look at it as a verb or a noun most of us will need to consider re-mortgaging at some point, for example;
- If your current mortgage deal period has ended and you want to avoid paying the lender’s variable rate
- If your circumstances have changed and you are looking to buy a bigger or a smaller property
- If you are paying high interest on loans and credit cards
These are all good reasons to re-mortgage but what if your case is not so clear-cut? Here are the main reasons you should consider it:
- It can save you money: This is the main reason you would want to look into a re-mortgage in more detail. This is particularly relevant if your mortgage deal is about to end but also if you are in a less advantageous deal or on a variable rate.
- You want to overpay but your lender does not allow it: Perhaps you’ve had a pay rise or maybe you’ve inherited some money. A re-mortgage will allow you to reduce the loan size and potentially get a cheaper rate as a result. But watch out for any early repayment charges or exit fees you face, and compare this to how much you’d save with the new, lower mortgage.
- Your home value has gone up a lot: If the value of the property has risen rapidly since you took out your mortgage, you may find you’re in a lower loan-to-value band, and therefore eligible for much lower rates. Again, you need to do your sums but it’s definitely worth a look.
- You want a flexible mortgage: Maybe you want to be able to miss a payment. Changing jobs, going back into education, going travelling – whatever the reason, there are mortgages which will let you take payment holidays. Whatever flexibility you want in a mortgage, chances are it’s out there. But remember products don’t offer these for free so expect to pay for flexible features with a slightly higher interest rate.
- You want to borrow more: Perhaps your current lender has said no to lending you extra money or the terms they are offering aren’t very good. Re-mortgaging to a new lender might enable you to raise money cheaply on low rates. But remember to take all the fees into account to see if it really is cheaper than other forms of borrowing.
As always, it’s very important to consider your personal circumstances carefully before you draw any conclusions. In any case, particularly if you are concerned regarding your ability to secure a good mortgage rate, a mortgage broker will be able to give you a wider picture of different lenders.
At Spot on Mortgages, we don’t charge a fee for our advice so get in touch with us if you wanted to speak to us further.
Your property may be repossessed if you do not keep up repayments on your mortgage.