The decision to buy a home is one huge financial commitment that anyone would have to make. But acquiring a mortgage and taking on arguably the largest debt can equally produce massive savings of several thousands of pounds annually.
If you’re the type to spend time shopping around for the best deals, whether on a brand-new TV or mobile phone contract, then you can apply the same skills to save more money on your mortgage by remortgaging. There are several reasons why you would want to remortgage but one of the main reasons would be to save money.
Depending on your present circumstances, remortgaging might not be the most suitable option for you as it could bring some disadvantages. However, if your current mortgage is about to end and you’re seeking a better rate, then you may want to consider it. Once your current deal ends, your lender would most likely put you on a standard variable rate (SVR) that might not only be higher than your previous interest rate but existing market rates elsewhere.
In this scenario, it would be better to remortgage to a much cheaper rate but be sure to start looking around early enough before your current deal elapses—especially since the coronavirus pandemic has lengthened the time it takes to remortgage a property.
Another indicator that you should remortgage your house is when the value of the property has increased rapidly since your last mortgage payment. You may discover that you’re now eligible for a much lower interest rate since you now fall within a lower loan-to-value band. While you may still need to do your own calculations, it is still definitely worth taking a look at as a potential money saver.
If your mortgage is quite little—say about £50,000—it may not be the best move to remortgage as you may have to pay a high fee to switch lenders. In fact, most lenders won’t even allow homeowners to collect mortgages on houses that are less than £25,000. Therefore, it would be in your best interest to remain on your current mortgage if the debt is really small.
Some homeowners want to have a much more flexible mortgage where they can skip payments without any consequences. For example, if they were changing jobs, going on vacation or paying for an educational degree, having some flexibility where they can get payment breaks would be immensely useful.
Whatever level of flexibility you want from a mortgage, there’s a high chance that it already exists and all you just need to do is search for it. If remortgaging sounds like something great for you, it is advised that you begin your search for a new lender at least 14 weeks before your current mortgage expires.