Remortgage Options
Should You Remortgage?
Due to the a sharp increase in property prices coupled with the lowest interest rates in 45 years, there is currently a major opportunity for many people to benefit from remortgaging. This strategy is often a very good way for people to take greater control of their financial situation and save money in one easy and straightforward action..
Our FSA approved mortgage specialists can give you mortgage switching advice and advise you of the savings benefits of remortgaging within the context of your individual financial circumstances even if your credit rating isn’t perfect or if you have County Court Judgements (CCJs).
How Much Is My House Worth? - You can find out the approximate value of your home by comparing the actual sale prices of properties near to where you live on the website link below:
Click on the link and add your Post Code details.
www.nethouseprices.com
Remortgaging To Save Money
You can take out a mortgage at a lower interest rate thus reducing your monthly mortgage or loan payments. With interest rates at their lowest in years, you can find some excellent APR rates - sometimes far much lower than what you're paying for your current mortgage. Remortgaging when rates are down can save hundreds of pounds every month and thousands over the life of your loan. After 2 to 5 years most homeowners start paying the lender’s standard rate because cheaper deals expire after a few years.
The standard rate is usually a lender’s most expensive option. This usually means that you should switch to a different company or remortgage to get a better deal. For example, a borrower with a 25-year £100,000 mortgage who is on a standard rate of 6.9% APR would have monthly repayments of £687. But if he or she remortgages to a deal with a rate of 4.5% APR, monthly repayments would be £550. He or she would save £137 a month or £1644 per year.
Remortgage to Raise Cash or Release Equity
The way this works is quite simple: you remortgage for more than you currently owe and the balance will be available as a cash lump sum. Your monthly repayments will rise, but this is usually cheaper than taking out a personal loan or using credit cards. (In some cases, monthly payments may actually decrease.) Remortgaging is cheaper because interest rates on mortgages are usually much lower than interest rates on personal loans or credit cards.
Cheaper to remortgage than to move home
If you need to move home in order to get a bigger house, you may find that it’s cheaper to remortgage to raise money for an extension than to move home. This is because removal costs can be as much as £2000 and Stamp Duty makes moving even more expensive. Stamp duty is the tax imposed by the government on house purchases and it adds 1% to homes over £60,000, 3% to homes £250, 000 and 4% to homes over £500,000. Since extending a property usually increases its value, remortgaging can be a more attractive option.
Remortgage to move to a more flexible mortgage
Some homeowners remortgage in order to move to a more flexible mortgage. Repayments of traditional mortgages are usually the same each month, but flexible mortgages can allow you to change your mortgage payments to suit what is happening in your life. You can make lump sum repayments off your mortgage, underpay or take payment holidays, re-borrow any overpayments you have made or use your mortgage as a quick and easy way to access funds in the future. Interest on flexible mortgages is usually calculated on a daily basis while on many conventional mortgages, it is still calculated annually. Flexible mortgages vary from lender to lender but most of then are designed to give you more control over your finances than conventional mortgages.
Endowment shortfall
In 2000, letters were sent out to many endowment mortgage holders warning them that their policies were unlikely to meet their mortgage repayments. These borrowers are being told to increase the money they pay into the endowment in order to meet the shortfall. Instead of increasing endowment payments you could consider remortgaging and perhaps even save money. If you get stuck with a poorly performing endowment mortgage you can remortgage and take advantage of the deals that are currently available.
Remortgage To reduce the term of the mortgage
Reducing the term of your mortgage can help you save money over the life of the loan. For example, remortgaging from a 35-year mortgage to a 25-year loan might result in higher monthly payments, but the total of the payments (or total cost of the loan) made during the life of the mortgage loan can be reduced significantly. Use our Remortgage Savings Calculator to see how the total cost of the mortgage reduces when the repayment period is shortened. Remortgaging can also save you thousands in interest charges over the life of your mortgage.
Remortgaging To consolidate debts
Remortgaging to consolidate debts is cheaper than taking out a personal loan or using credit cards. This is because interest rates on mortgages can be as low as 4% while the cheapest personal loan rates are about 7% and standard rates on most popular credit cards are as high as 17%. Therefore to consolidate bills, personal loans and credit cards, all you have to do is increase the size of your mortgage and use the money that you’ve raise to pay off your more expensive borrowings. .
Remortgaging to Switch from variable to fixed rates
You can also remortgage in order to switch from a variable rate mortgage to a fixed rate mortgage. The main reason for doing this is to obtain the stability and the security of a fixed APR rate. Fixed rate mortgages are very popular when interest rates are low, whereas variable rate mortgages tend to be more popular when rates are higher. When rates are low, you can remortgage to lock in low rates. When rates are high, you may prefer the short-term discounted variable rate loans to obtain lower payments. A major benefit to remortgaging when rates are low is the ability to lock in a low interest rate for the duration of your loan. |
