24 Dec 2014
Natalie Welsh, Independent Mortgage Adviser, looks at reasons for remortgaging.
Many clients will be seeking to review their finances in the New Year. The remortgage market is still very active and many lenders are offering competitive deals where they will cover the cost of valuation and legal fees involved with a remortgage. Interest rates currently remain low and now may be the time to shop around.
There are a number of reasons that people look to remortgage, and these reasons will naturally affect which remortgage deals are appealing.
If you’re thinking about remortgaging to get yourself a better interest rate, an alternative mortgage deal may well have a considerable impact on your outgoings. If you’re currently on a fixed rate but the period for this rate is soon ending, it’s understandable that you might want to shop around.
Even if you are on a lenders standard variable rate it is likely a better deal could be found with that lender or elsewhere. Many people will be seeking fixed rates going forward if the pressure on interest rates to rise increases.
Whatever motivation you have for seeking a better rate, you should ensure you take the time to do your sums and calculate what the impact of a new mortgage deal is likely to be now and bearing in mind future potential rate changes. Compare this to your current situation and make sure it’s worth it before making the change.
You should also bear in mind that your current mortgage lender may enforce fees for paying the mortgage off early, so take this into account in your calculations.
Debt consolidation is one of the main reasons that people consider remortgaging. If you’re a homeowner and have multiple debts and have equity in your home, it can be tempting to acquire funds using your home as security, to clear these debts. This may allow you to reduce your monthly outgoings however you are likely to pay more in total. You should always think very carefully before securing borrowing within your property, as this will naturally be at risk if you fail to meet the repayments.
Many people remortgage to gain funds to carry out home improvement work to their property. This is often seen as a sensible option, as any improvements you make to your home may well increase its value in the long term. Spending in this way may therefore be an investment in your property as you will likely see a return on it at some future date.
If you’re home has risen in value during the period of your mortgage, you may well want to see the benefit of this value through equity release. Remortgaging is one of the ways you can do this, as it can be built into the terms of the deal, however it basically amounts to further lending on your property, and should therefore not be entered into lightly. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT SEEK INDEPENDENT ADVICE.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Moving forward, with so many options available to you, it is very important to seek professional mortgage advice as early as possible and Aberdein Considine will of course be happy to assist with this, contact us to discuss further by clicking here.