Remortgaging, if doing it for the right reasons, can be a great idea. Especially if you seek help from a professional and experienced mortgage advisor.
In this blog, we are going to discuss the most popular reasons why people remortgage their homes, and why you may want to remortgage your home.
Remortgaging For A Better Rate
Remortgaging to get a better rate is one of the most common reasons to remortgage your home. It can save you a significant amount of money.
After asking around or doing some research, you may have found that you are paying over the odds with your current mortgage rate.
Switching to a new mortgage provider may save you a huge amount of money. However, bear in mind that there will likely be an exit fee or an early repayment charge for leaving your existing mortgage provider.
Your best option is to speak to a mortgage advisor and find out whether moving to a lender with a better rate would be worth it, despite the charges you may have to pay to your current lender.
More often than not, moving to a new lender is worth it and will save you considerable amounts of money.
Your Fixed Rate Is Coming To An End
For the first 2-5 years, you will be paying your mortgage at a fixed rate, which is almost always a lower rate than the lender’s standard variable rate (SVR).
However, once this “headline offer” has expired, you will end up paying the lenders SVR, which can mean a significant increase to your monthly repayments.
This is the perfect time to remortgage your home. By switching to a new deal before the headline offer expires, you can save a lot of money.
When this time comes, a mortgage lender will be able to offer advice on which mortgage lender is offering the most suitable mortgage product to suit your needs. Remortgaging when your fixed rate is coming to an end is one of the most common reasons to remortgage.
To Make Home Improvements
There are several reasons why you may choose to make home improvements.
You may want to extend your home for your growing family or improve your home to increase its value. Or you may need to adapt your home to suit the needs of someone within the household, such as an elderly or disabled loved one.
Whether it is the kitchen remodel you have always wanted, or the modular home extension a disabled loved one needs, having work done to your home can be extremely costly.
Many people choose to remortgage their homes to pay for home improvements. And most mortgage lenders are willing to loan more money providing it is going to be used for the right reasons.
Home improvements are considered one of several acceptable reasons to remortgage your home. However, you should be prepared to provide receipts to prove that the money is being spent on home improvements.
Your Home Has Increased In Value
It is not uncommon for the value of your property to increase, especially if you have made significant improvements to your home. External factors can also increase your home value.
For example, in 2021, the governments “stamp duty holiday” combined with a shortage of properties and a high demand for more space led to a sharp rise in house prices. Studies show that the average UK house price rocked by 10.2% in less than 12 months.
If your home value has significantly increased since you took your existing mortgage, you may be eligible for lower interest rates. Speaking to a mortgage advisor is the best way to find a new rate.
Debt Consolidation
Debt consolidation is another common reason why people choose to remortgage their homes. if you have multiple debts, such as short-term loans or credit card bills that you are struggling to stay on top of, then debt consolidation may be ideal.
By remortgaging your home, you should have enough money to pay off your debts and be left with a single monthly lower monthly debt.
However, debt consolidation should be carefully considered as your home will be at risk if you fail to make repayments.
In addition, you will have to declare your debts to a mortgage lender to remortgage your home for debt consolidation. But some lenders will see this as financial mismanagement and may not be willing to remortgage your home.
Added Flexibility
Most mortgages have strict terms that must be adhered to. If there is a change in your circumstances and you would like to make changes to your mortgage, you may not be able to.
For example, if you want to pay more of your mortgage off because you have had an increase in income, your mortgage terms may prevent this.
By remortgaging, you can find a lender and a deal that suits your needs and circumstances.
Using A Mortgage Broker
Regardless of the reason, remortgaging your home can be complicated and it is always best to seek professional advice.
A mortgage advisor (also known as a mortgage broker) will take your current mortgage into account and find the best deal that meets your requirements.
Here at Burnett Mortgages, we have access to hundreds of exclusive deals that may not be available to you by going direct to the banks and building societies.
For more than 12 years, we have helped homeowners and those hoping to get on the property ladder by providing experienced mortgage advice.
Get In Touch
If you have any questions about remortgaging your home, don’t hesitate to get in touch with Burnett Mortgages. You can call us on 01302 436 333, email us at simon@burnettmortgages.co.uk or fill out our online contact form.
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