It’s no secret that many people aspire to have their own homes. For this reason, they take out a mortgage because they most likely can’t pay for a house out of pocket. However, despite the leeway that a mortgage gives, some issues might arise. Thankfully, remortgaging is an available option.
Remortgaging is when you get a new mortgage on a property you already own. In other words, you take out a mortgage on your current home. A remortgage is common depending on the situation, and there are times when it may be the best course of action. Additionally, it may be better to remortgage than to sell your home because remortgaging could allow you to reduce your debt and your monthly payments. Regardless, not many people realise the value of remortgaging, let alone know the scenarios where they may be left with no choice but to do it. We list some of these instances in this article, so read on below to get started.
#1 – The Existing Deal Is Ending
If your mortgage deal is coming to an end, then you can consider remortgaging. When your mortgage deal comes to an end, you have two options—you can either pay out your existing mortgage or take out another one. The existing one gets paid out in full by taking out a new mortgage.
#2 – You’re Looking For a Better Rate
You may be paying high monthly repayments when you have an existing mortgage. Thus, if the rate on your mortgage increases, you can consider remortgaging as you may be able to reduce your monthly repayments. The key is to find a lender that offers you a better rate than your existing lender.
#3 – You’re Looking To Borrow More
When you remortgage your property, it may allow you to borrow more money. While remortgaging can be risky, you’ll need to be cautious when taking out a mortgage. If you’re not careful about it, then you’ll end up with excessive repayments that you might not be able to afford.
#4 – Your Home’s Value Increased
The value of your home can increase, especially if you’re living in a rapidly growing area. Thus, if you remortgage your property, you may be able to take out a larger loan. This could also result in lower monthly repayments. However, you’ll have to be careful because you may owe higher amounts in the long run.
#5 – There’s a Possibility That Interest Will Go Up
Most people think that interest rates cannot go up, but that’s not the case. Over time, interest rates can rise, especially if inflation grows. Thus, if you want to safeguard your finances in the future, you should consider remortgaging before the interest rate goes up. This way, you’ll be able to enjoy lower interest rates.
#6 – Your Lender Won’t Allow You to Overpay
Overpaying your mortgage is an excellent way to reduce your debt, but not every lender allows you to do so. Many of them won’t let you pay off your mortgage early. As a result, the most suitable option may be to remortgage so you can pay off your mortgage early.
#7 – You’re Switching to Repayment Mortgage from Interest-Only
As interest rates have been at an all-time low, it’s common for some people to stick with the interest-only option. This way, they can enjoy lower repayments for a longer time. However, interest rates can be volatile, which means the low rates you enjoy now could quickly and easily turn around. Thus, you can consider remortgaging your property if you need to switch from interest-only to repayment mortgage.
Conclusion
Remortgaging is a valuable way to deal with your debt. By starting small and paying your mortgage off little by little, you should be able to get out of debt faster. Additionally, remortgaging can help you get a better deal, especially on a repayment mortgage. Just be sure to conduct adequate research to ensure that you’re making the right decision.
If you’re looking for remortgage deals, A Move Brokers can help you! We have comprehensive loan options that suit any homeowner’s needs, all for reasonable rates and terms. Reach out today and allow us to assist you!
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.