Remortgaging – you may have seen the term floating around in one of our previous blogs, but do you know what it means?
Well for those that don’t and have clicked the link from another blog to lead you hear in order to find out, you’re going to learn all about remortgaging! If you’ve heard of it, the back buttons up there…
If you haven’t, get ready to learn exactly what it is and why you should do it.
Shall we start with the official definition of remortgaging? Well tough, it’s not in the dictionary yet so you’ll have to take our explanation for it instead…
Remortgaging is taking out a new mortgage on your home, in order to either replace an existing mortgage (paying it off), or to borrow more against your house. So many people across the UK use remortgaging. Because it helps them save money in the long run. If you’re wondering how, all you need to do, is read the section below.
Why you should Remortgage
Like we said above, one of the key reasons people remortgage is in order to save themselves some money. But, some also use it if they need to borrow more money and have no other means to secure the funds. There’s a multitude of reasons, and we’re going to explain a few below:
1. Interest Rates
If your mortgage is a one that follows the base rate of the Bank of England, and interest rates are about to rise, now is the time to see if you can remortgage. Rising national interest rates, for most mortgages), means that you’ll be paying more on top of your mortgage – which isn’t fun. So, consider remortgaging if you’re not keen on paying more…
2. End of Incentive
Most mortgages offer an incentive period, an offer at the start that means you have low interest rates, for a year or so… Most of the deals last for 2-5 years, which means that after this period, you won’t be getting the best deal. So, remortgage and get yourself a better deal!
3. Borrowing More
As we’ve said above, many choose to remortgage their home when they need to borrow more money. However, there are fees, including exit fees, if you choose to remortgage. But it can’t hurt to look around and see what’s on offer. Your current provider may be willing to lend you more – just ask nicely… If it’s not an option, then consider remortgaging.
4. To Overpay
Bear with us on this one… So, if you’ve got a bonus at work or found yourself with inheritance money, and you want to pay off a hefty amount of your mortgage then you may wish to overpay. However, some providers may not be so willing to let you overpay. Why? Because it means you’ll be out of your mortgage quicker and be around for less years of interest. Consider remortgaging if you want to pay off a chunk of your mortgage and lenders won’t allow you to.
5. Your Home is worth more
Some find that the value of their property can rise, which means that your loan-to-value band isn’t right for you and your home. If the property costs more than the initial mortgage you took out, you’re eligible to move bands and will have access to better rates. If you think your home’s value has gone up, it might be time to remortgage.
6. For better rates
If you want a mortgage with a better rate, it might be time to remortgage. The advantage of remortgaging is that you may be able to find a better rate, as well as save money. However, be aware of exit fees, as these can be costly. Remortgaging can count as an early repayment, so fees are involved in this process. It’s not ideal to remortgage if you’ve not got a lot left to pay (as the fees may be more than paying off the mortgage).
And that’s all you need to know! If any of the above sound ideal to you, consider remortgaging. It could benefit you but shop around and do your research. It may not always be beneficial to remortgage.
If you’re looking to remortgage, use the Zing website to see what rates you can get! We might be able to help you save some money.