When’s The Right Time To Remortgage?
Were you thinking of moving but decided to stay put? In that case, it could be an ideal time to review your current mortgage and potentially remortgage. Here, I explain how the process of remortgaging works.
I CAN AFFORD MY MORTGAGE – WHY SHOULD I BOTHER CONSIDERING TO REMORTGAGE?
Banks rely on customers not shopping around and it’s not uncommon for there to be cheaper offers for you elsewhere. You might be someone who shops around for insurance and utilities to save £20pm. But have you ever stopped to think about how these savings could be dwarfed by your biggest bill – your mortgage?
All you need to do is have a look at a price comparison website or contact a local mortgage broker to compare deals on your behalf if you haven’t got the time.
You might be tempted to leave your mortgage where it is if you’ve had your mortgage a long time. This is because you could be on a low Bank of England tracker deal. You may even be paying less than 1%. However, it’s worth noting that your payments will increase when the base rate eventually goes up.
CAN I BORROW MORE MONEY FOR HOME IMPROVEMENTS?
Subject to the usual affordability checks and assuming you have got equity in your property then yes. This can be a good investment if you use the money wisely. Often, we see customers do this to facilitate building an extension or converting their loft in order to add value.
CAN I BORROW MORE MONEY FOR OTHER REASONS?
You can borrow extra funds for most legal purposes, examples of this would be:
- Debt Consolidation
- Property Investment (e.g. into a Buy to Let)
- Consumer purchases
- Gift to relative
Make sure you are doing this for the right reasons though as you will end up paying back more interest because your mortgage will increase.
ISN’T IT A BAD IDEA TO ADD UNSECURED DEBT TO MY MORTGAGE?
You need to be aware that it can be a bad idea to add debt to your mortgage because, as mentioned above, you will end up paying back more interest. This is as a result of essentially extending the term of your debts to make the payments lower.
You are also taking debt, which is not secured, and securing it on your home. This puts you at risk of repossession if you cannot keep up repayments. Consolidating debts that you can afford or credit cards that are at 0% interest will almost certainly be the wrong thing to do.
However, it can be a viable option if you need to reduce your monthly outgoings to avoid missing payments which could damage your credit rating.
WILL MY CURRENT MORTGAGE PROVIDER OFFER ME A REMORTGAGE DEAL?
Often your current Lender will offer you a remortgage deal to stay with them. You might hear this referred to as a “Product Transfer” or “Retention” product. This isn’t guaranteed and sometimes you have to contact your provider directly to see what is available. It is possible that some lenders may allow you to make a product switch online without taking advice or providing further information/documentation.
Just a couple of words of warning here.
Firstly, whilst it may be easier to stay with the same provider and switch products rather than put forward a new application to a different lender, you may find that you could save a lot of money by doing switching providers. So, it might be worth exploring.
Also, and most annoyingly of all, many Banks still offer preferential rates to new borrowers over existing ones. One day, Lenders will get their act together and realise that taking a more ethical approach would breed loyalty amongst their customers. Why should you be offered a worse deal than a new customer? Especially if you have proved yourself credit-worthy by keeping up your repayments.
Please note that the above information about is for reference purposes only and is not to be viewed as personal financial or mortgage advice.