If you are considering remortgaging your home, there are a few things you should know. In some cases, switching to another lender or loan may be the right financial move. Remortgaging might help you get better terms or lower your monthly payment.
However, before you switch to another mortgage lender, make sure that the process is worth it. Refinancing will cost you money in fees and closing costs. In addition, if your credit score has dropped since getting your original mortgage, you might have fewer options for lenders.
With these considerations in mind, here are a few things to consider while remortgaging your home:
No penalty for early repayment – When you take out a new mortgage with a lender, one of the first things you should check is whether there is a penalty for early repayment. If there is no penalty for early repayment then it means that if interest rates fall further then you can remortgage again without incurring any penalties from your current mortgage provider. This means that if interest rates do go down further in the future then it will be possible to save even more money at the end of your term by remortgaging again.
Your current loan agreement – how much longer do you have until you finish paying off the original mortgage?
The type of deal that you originally agreed to – were you on a fixed rate or a variable rate? What was the term of the deal and what were the fees?
Remortgaging can be a great way to get money for a particular project, but it’s important to do your research first. Here is what to consider before making any decisions:
What kind of mortgage do I want?
Do you want a fixed rate or variable rate? A fixed rate means that the interest rate stays the same for the full term of your mortgage, while with a variable rate, your interest payments could rise and fall as market rates change. If you’re looking for security and peace of mind, then a fixed-rate mortgage is probably best. If you’re looking for low monthly payments and are happy to deal with unpredictability, then variable rates may be right for you.
When remortgaging you should consider other factors in addition to getting the best interest rate. For example, you may have had adverse credit issues in the past and are now able to get a better deal. Perhaps your income has increased, allowing you access to more favourable terms. Your debt-to-income ratio may have improved since applying for your current mortgage, which is another factor that could help secure better terms when remortgaging.