Your mortgage is probably your biggest monthly cost, so you’ll want to ensure you do everything you can to keep it as low as possible. If you’re approaching the end of your initial mortgage term, you might be able to save thousands of pounds just by switching your mortgage deal.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Remortgaging savings
At the end of your lender’s introductory period on your current mortgage, they will automatically switch your mortgage to their standard variable rate (SVR). The SVR isn’t currently as high as it has been in previous years, but it could still mean that you pay almost double what you would be paying if you switched to a new mortgage deal. The savings each month could add up to thousands of pounds every year during the life of the loan.
Reasons to remortgage
The biggest reason to remortgage is getting a lower interest rate. Your monthly payments and the overall amount you owe will decrease with a better deal. The standard variable rate you automatically get transferred to after your initial term is usually higher than your introductory rate, so it’s best to avoid any further strain on your bank account.
Alternatively, you could reduce your mortgage payments by extending the term of your existing mortgage. This might not be the best plan though, because this option will cost more in the long run as you will accrue interest. In contrast, remortgaging with a different lender will not only help you reduce the length of your mortgage term but it will also allow you to pay it off quicker.
Another reason people remortgage is to access equity. They want to release some money that has built-up over the years. You can use the money to pay off or reduce other debts or even put the money toward home renovations.
Even if you’ve been making steady payments for years and you’ve managed to pay off a large portion of your loan, it might pay to remortgage.
Once the bulk of your original mortgage loan is paid off, you could apply for a lower LTV (loan-to-value) mortgage. These types of loans may have lower rates, so securing a new mortgage deal would be ideal.
Are variable rates always the wrong choice?
Those on variable rate mortgages might want to switch to a fixed-rate deal that would guarantee a specific monthly payment to help with financial planning and budgeting. On the other hand, some people on a fixed-rate mortgage might want to take advantage of the incredibly low base rate with a variable rate mortgage.
Concerns about remortgaging
Maybe you want to switch to a better mortgage deal, but something is holding you back. If you’ve been unable to work for a period of the pandemic, your income might have decreased and you may worry you’ll be rejected for a new deal. Or perhaps you are still uncertain about what the future will bring and would prefer to wait until you’re on more solid financial ground. Or actually, you might just think it’s too much work to remortgage.
While most of these concerns are not without merit, it doesn’t mean that you’ll be better off with your current mortgage deal. If you work with a professional mortgage adviser you’ll be able to easily see which mortgages are available to you and what rates you could be approved for without wasting time endlessly searching for the best deal on your own.
Is it time to switch your mortgage?
If you want to find out if you could save money by switching your mortgage, we can help. We’re happy to guide you toward the best deal for you, so get in touch today to get started.
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