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Remortgaging in 2019

Remortgaging in 2019

With Brexit just around the corner, many people are worried about the effect this could have on the mortgage market. Amongst all the questions flying around about what will happen to the property market once it passes, one of them being if remortgaging is a good idea now.

In short. Yes.

With recent research from Virgin Money revealing that 750,000 mortgages are set to mature this year, this can make a great time to shop around for a better deal. With this being one of your most expensive financial commitments, making sure that you’re on top of which deals are best for you is an excellent way of potentially saving you thousands over the years.

Wondering how remortgaging works and if it’s the right decision for you? Keep reading!

What is Remortgaging?

Even those who have had a mortgage for years are still unsure exactly how remortgaging works, or even what it is.

Essentially, remortgaging is just switching your mortgage to a different deal either with a new provider or your existing lender. Since this deal is secured against the same property, you don’t need to move to a new house. The more equity you have and the lower your LTV (Loan to Value) the better deals you could qualify for.

When Should You Remortgage?

While the idea of getting a better deal on your mortgage sounds tempting, be aware remortgaging can very much time dependent and not something that everyone with a mortgage should jump into without doing adequate research.

Many good mortgage rates only last short time- the usual period on a tracker or fixed rate mortgage being two to five years. Once it comes to an end, your lender will put you on a standard variable rate which will probably be higher than your old interest rate. This is when you should consider remortgaging.  Since remortgaging usually takes 1-2 months to complete and you want to get this done before you’re pushed into the standard rate, you should start looking for better deals around 12 weeks before your rate ends.

Reasons to Remortgage

There are plenty of reasons to remortgage. Like most people, your mortgage is probably one of your biggest monthly expenditures, and there are a number of reasons why you may consider remortgaging your property.

Home Improvements. Home improvements are a great way to freshen up your space and increase your property’s value, but they can also be expensive. Remortgaging to afford these changes can be a smart investment as these changers can increase the value of your property in the long term. Perfect for if you want to sell in the future.

Consolidating Debt. This is one of the main reasons many people decide to remortgage. If you have a number of different debts, keeping control of your finances can get difficult. If you’re a homeowner, you can remortgage to use your property as security to clear your debts. While this can simplify your obligations, make sure to consider your financial situation thoroughly before you do this as you can run into trouble if you don’t keep up your repayments.

Finding a Better Rate. This is probably the most straightforward reason that many choose to remortgage. They simply found a better deal. If you’re on a fixed rate deal but the period for the rate is coming to an end, you might want to shop around for a better mortgage product. If you’re looking for a new deal, make sure you do your research. Luckily, there are plenty of remortgage and mortgage interest calculators that you can use online for free.

Equity Release. If your home has increased in value, you may see the benefit of its value though equity release. You can do this by remortgaging as it’s in the terms of the deal, however, make sure to consider this carefully as this will amount to more lending on your property.

Changes in Financial Situation. Financial situations can change for a number of reasons. Whether you have a change in circumstances from illness, divorce or redundancy, you may find it hard to keep up with your mortgage repayments. If this happens, remortgaging is one of a few options a mortgage lender may suggest for you.

Finding the Right Deal

When this time arrives, there are a few different ways you can look around or a new mortgage deal. One of the first things you can do is use a mortgage interest calculator to see how much you’ll pay when you come to the end of your rate or if you’re thinking about any possible changes to the Bank of England Base Rate.

Once you have an idea, then you can start looking around for other deals. Plenty of online mortgage brokers have free remortgaging calculators that you can use. While they are convenient and straightforward, they’re only going to give you a general overview of deals you may be accepted for.

As it’s such a substantial financial decision, it’s always prudent to get a professional opinion. Most physical mortgage brokers will have access to the same number of mortgages as online services and will be able to move your application on immediately. While these kinds of brokers will charge a fee for their service, they are contracted to help you find the right deal, plus they will be there to explain anything you might not be sure about.

If you think that remortgaging might be a good choice for you, make sure you’ve gone through the proper steps first. While there is the potential for you to save thousands, you must make sure that: you’ve found the right deal, that it’s the right time for you to change and that you’ve done all the proper research.

About Penny Jones

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