As the year comes to an end, it’s a time for reflecting and planning for the year ahead. Homeowners may be considering their options with regards to their mortgages and thinking whether to remortgage. Remortgaging means paying off an existing home loan and acquiring a new one. What are the reasons for remortgaging? Maybe your existing arrangement is no longer suiting your needs or your financial situation has changed. When used carefully, remortgaging can be a valuable tool for bringing debt under control.
Here are the main reasons to refinance your mortgage:
- To get a better interest rate
If remortgaging means you will reduce your loan’s interest rate by at least 2%, then it could be a worthwhile decision to make. Reducing your interest rate helps you save money and also speeds up the rate at which you build equity in your home.
- Refinancing to shorten the loan’s term
When interest rates fall, it can present the opportunity for homeowners to refinance an existing loan for another loan with a shorter term, keeping the monthly payment roughly the same and thus being able to pay off the loan sooner.
- To get new features or add-ons to your loan
If your property value has increased and you have good equity in your home, you may be able to get an even better deal from your existing mortgage provider or from a new one. Mortgage products change so much over time, it is a good idea to consult with a mortgage advisor every few years to see if there is a better product more suited to you. Free mortgage advice is the least you can get.
- To be able to use the equity in your home to make home improvements
If you want to make improvements to your home and you have equity in your property then remortgaging is one way to generate finance. Speak with a mortgage advisor early on in your thought process to find out if it is a viable option.
- To consolidate your debts
Consolidating your debts makes managing your money simpler, easier and can potentially reduce your monthly repayments, fees and charges. Whether to remortgage or not needs careful consideration and there are some important things to consider when looking at your options as follows:
- Be sure you understand the potential costs involved in refinancing such as entry, exit and application fees.
- Refinancing is good for the long run and should only be considered if you are planning to stay in your current home for more than a few years.
- Always seek mortgage advice before making any decisions about remortgaging. It’s easy to get instant and free advice from Propillo.