Homeowners Take Note: Could Now Be The Right Time To Remortgage?28/02/2022
What does it mean to remortgage your property?
Remortgaging your property refers to the process wherein you take out a new mortgage on a property you already own. People opt to do this for one of two reasons: either to replace their existing mortgage, or to borrow money against the value of their property.
Remortgaging is an increasingly common choice amongst homeowners, with around one third of total home loans in the UK being remortgages. However, many homeowners often feel confused as to whether remortgaging is a wise choice for them or not. So, we’re here today to help you understand whether you
could benefit from remortgaging your property.
Should you remortgage?
Many of us hear the word “remortgage” and feel a little nervous, as we usually relate remortgaging to the idea of taking on more debt. Of course, you can indeed remortgage in order to release the equity tied up in your home. However, the majority of remortgages take place as a way of saving money on monthly repayments, and that’s what we’re going to talk about today.
For many, remortgaging is the option that offers the best value for money when the fixed term on their current mortgage comes to an end. This is because when your fixed term closes, there’s a high chance that your current lender will switch you over to their Standard Variable Rate (SVR). This can often mean that homeowners will end up paying up to double the interest rate that they were paying throughout the course of their fixed term.
So, by remortgaging, either with your current lender or a different one, you have the chance to shop around a bit, and ensure you are receiving the best deal possible on your mortgage. Sort of like scouting out the best contract for your mobile phone or the best deal on your utilities.
Indeed, many find that working with a trusted financial advisor (such as ourselves here at B Advised!) helps this process of shopping around. Employing the skills of an experienced advisor helps individuals to demystify the process of remortgaging their property, and enables them to proceed with confidence that they are securing the best possible deal, one that will save them money in the long run.
So, in what circumstances exactly might you consider remortgaging?
1/ The fixed term on your current deal is about to end
Fixed term on your current mortgage deal about to end? Not a problem!
Get ahead of the game and shop around for a cheaper rate, advisably about three to six months before your current rate comes to a close. By doing so, you can avoid delays that leave you stuck with your current lenders SVR.
2/ Your home’s value has risen considerably
Skyrocketing growth in property prices over the last several years means a lot of homeowners may find themselves in this position.
If you have recently had your home valued and have discovered (pleasantly!) that it’s value has shot up since you took out your mortgage, you may now be in a lower loan-to-value band, meaning that you’re eligible for considerably lower rates. It’s worth shopping around and doing your sums to find out if you could benefit from remortgaging in this case.
3/ You’re concerned about rising interest rates
Now this one is particularly relevant right now.
In March of 2020, interest rates hit an all-time-low as the Bank of England attempted to lessen the economic impact of the Covid-19 outbreak, with rates plummeting to 0.10%. Fast forward to 2022 and in the current climate of instability, interest rates are on the rise once more, consistently creeping above the Bank of England’s 2% target.
Unfortunately, this has serious implications for the mortgage market. As a result, now might be the ideal time to switch to a cheaper deal, before lenders begin to price in this inflation and whilst mortgage rates are still low.
Working with a financial advisor that you can trust can go a long way towards simplifying the process of remortgaging. Here at B Advised, we can guide you through the process and ensure that you’re securing the best deal. Simply get in touch today.