The news is filled with reports of the escalating cost-of-living crisis. Sky-high inflation, climbing interest rates, and surging energy prices have created a perfect financial storm. Even the best budgeting might not be enough to beat the crisis. Many are finding ways to cut unnecessary costs, tightening the purse strings wherever they can. Could remortgaging be the key to winning the battle?
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 could be your secret weapon
Remortgaging means switching your current mortgage to another lender in an attempt to save money on your monthly repayments, but still stay in your current home. This tactic could be an effective strategy in the fight against the cost-of-living crisis. As mortgages are often the biggest financial expense one can take on, it makes sense that this would create significant savings.
Deciding to remortgage is a big decision, and with so many different options available to you, it’s imperative you understand the process and know what factors to take into consideration.
Why you might want to remortgage:
- The end of your current mortgage term is coming up and you will be switched over to your lender’s standard variable rate (SVR). These interest rates are typically higher than your current rate, so want to avoid this happening.
- During this cost-of-living crisis, you want to reduce your monthly repayments. Securing a new mortgage deal could help lessen your monthly burden without having to borrow more money.
- If you’ve had a change in your financial status and want to start overpayments, but you are not allowed to do so with your current mortgage provider.
- The value of your property has increased and you might qualify for a cheaper mortgage with a lower loan-to-value (LTV) ratio.
- The Bank of England base rate has changed and you’re on a variable-rate mortgage. You could find a more competitive rate by remortgaging.
- If you anticipate a change in your circumstances or want to avoid increasing interest rates, remortgaging to a fixed-rate deal could help you find stability. With a fixed rate, you’ll be able to budget more effectively as your monthly payment stays the same.
Timing is everything
No matter what the economic outlook looks like, it’s always a good practice to regularly review your mortgage and remortgage when advantageous. Make sure you know when your term ends and set a reminder 6 months in advance so you have time to look for new deals and ready your application for the remortgaging process.
If you have made a significant dent in your mortgage and have accumulated a solid amount of equity, you could score a more competitive rate and lower your monthly payments in one fell swoop. Just be sure you won’t be on the hook for any fees or penalties if you end your mortgage early. Speaking to a professional will help you understand if remortgaging is right for you.
Safeguard against future rate hikes by remortgaging
With news that even more Bank of England base rate hikes are in our near future, now is the time to act to avoid rising interest rates. Or if you simply want to free up some cash for unexpected expenses, reduce your monthly payment, or take advantage of increased property value, remortgaging might be the best move for you. Contact the experts at Dental & Medical Financial Services to get started on the process.