Many of us might not be familiar with the concept of remortgaging. For first-time homeowners, gaining that first lending agreement is the culmination of many months’ work and negotiation. Once those payments start going through, you wouldn’t be at fault for thinking the long series of repayments in 5-7 year increments is all that’s left. However, many people are likely to have a change of circumstances over the next 20 or 30 years. Over that timeframe, your earnings, situation, employment or ambition are all likely to change and develop – but that isn’t to say you want to necessarily move house, too. Enter remortgaging.
Taking out a remortgage loan on a property you already own means you can replace a mortgage you’re already in the process of paying or simply take a loan against the value of a paid-off property. They’re super common, in fact, around 30% of mortgage loans are remortgages. So, rather than settling in to pay off a loan that you might outgrow, take a look at a means of making your mortgage work for you.
A typical reason to want to remortgage is to shorten or lengthen the term of your loan. Often, as we get older, our salaries might increase, or we get married and pool resources, or even inherit capital. Paying off your mortgage faster is a great way to unlock your potential earnings in the future without needing to pay off your property. Equally, if earnings fall, or you need to unlock some cash quickly, extending the terms of your mortgage can reduce your monthly repayments.
Many people turn to remortgages for better interest rates. If you want to remortgage before the end of the deal you have now, often you’ll be forced to pay early repayment fees, which can be particularly high – as well as exit fees. Make sure you’re aware of those costs, but don’t let them put you off from exploring your options. A quick visit to a mortgage broker platform can show you the options from other lenders before you speak to lenders directly.
The Finish Line
The end of a mortgage loan can often mean being placed on a standard variable rate after your introductory rate ends. This is rarely representative or particularly good value to you, so it’s highly recommended you look into lower rates available a few months before your term ends.
Your Property Value Has Gone Up
So your property has gone up in value. Firstly, a huge congratulations, but you’ll also have some homework to do for it to really pay off in your mortgage terms. A property is tied to a loan-to-value band, and your house might fall into a new one, with lower rates if your house is worth more than when you bought it. Valuations can cost a little but it’s worth a check.
Remortgaging can offer a range of other benefits too. Some lenders might never let you make repayments early, or charge fees when they do. A new deal can mean a lot more flexibility and larger amounts available to borrow too. Fundamentally, your mortgage should be a reflection of your wider financial life and fit into your wider spending habits. Remortgaging is the opportunity to do exactly that; taking more control over how, when, and what you pay for your property.