Re-mortgaging activity has surged in recent weeks as homeowners rush to lock into low fixed rate deals.
As a result of the current Coronavirus Pandemic, many people are contacting us to find out if it is possible to re-mortgage to reduce their monthly expenditure.
Although some lenders have withdrawn some products from the market, there are still many competitive deals available which may reduce mortgage repayments.
Although the most popular reason for re-mortgaging is to reduce monthly repayments, there are other reasons why so many people are choosing to re-mortgage.
Changing Financial Situation
Many people, especially in today’s troublesome climate are having to find ways of cutting back on their monthly expenditure and with mortgage repayments being one of their highest costs, they are looking at re-mortgaging to help get their finances back on track.
Those finding themselves in this situation should contact their lender to see if there are any cheaper rates available or better still contact a local and trusted mortgage advisor to help them find a better deal.
Current Fixed Rate Deal Ending Soon
Mortgage holders whose fixes rate ends within the next 6 months can start looking for a new deal now. When fixed-rate deals end, mortgage lenders may offer either a variable rate mortgage or a replacement deal which is less attractive than the one currently in place.
When a mortgage deal comes to an end, the chances are that money will be saved by switching to a new deal rather than moving onto the Standard Variable Rate.
Depending on the size of the mortgage, savings of a hundred pounds or more each month can be made by simply changing lenders.
Most people tend to shop around when they are buying a car or booking a holiday, they could be missing a trick by not adopting the same habits when looking to save money on their mortgage payments.
Debt Consolidation
Debt consolidation is one of the main reasons why so many people consider re-mortgaging.
Homeowners who struggle with additional unsecured debt look to re-mortgaging as a means of reducing their monthly outlay.
Although consolidating debts by re-mortgaging may help reduce monthly costs, there are both advantages and disadvantages to be taken into consideration before making a final decision.
Equity Release
People who have lived in their homes for some time may have built up equity in their property.
The money released could be used for purchasing a new car, helping a family member onto the property ladder, setting up or supporting a business.
Depending on the age of the applicant, it may be possible to release equity with either a Lifetime Mortgage or a Home Reversion Scheme.
Is Re-mortgaging a Good Idea?
As with most financial decisions, there are advantages and disadvantages to consider before making a final decision, everything depends on the applicant’s situation.
Depending on the size of your mortgage, substantial savings can be made each month by simply changing lenders.
Depending on your circumstances and your reasons for re-mortgaging, if what you stand to save on interest payments is greater than the fees involved then re-mortgaging is worth considering.
Again, depending on your circumstances, if the costs involved amount to more than what you will save it may not be worthwhile.
If you are currently on a fixed-rate mortgage, early repayment charges will more than likely apply.
Move from an interest-only to a repayment mortgage
Although interest-only mortgages are much cheaper than traditional capital repayment mortgages, the original loan never reduces.
At the end of the agreed mortgage term, the full balance is required to be repaid by the householder.
Many homeowners have re-mortgaged their property to release the equity to repay the original amount borrowed.
How can we help?
If you have any questions about re-mortgaging, we are available at the end of the phone, please get in touch.