People often choose to remortgage for various reasons, all of which can impact the deal obtained. Remortgaging involves replacing your current mortgage loan with a new one from a different lender, compared to refinancing that often occurs with the current lender. If you’re curious about when and why to consider remortgaging, keep reading.
Achieving a Favorable Rate
A prime motive for seeking a new mortgage is the appeal of lower interest rates. If your fixed rate period is nearing its end, you might be tempted to search for more favorable rates elsewhere. Even so, it’s crucial to fully comprehend the potential implications of the new loan; it’s not just about securing a better deal. Accurate estimates are crucial to understanding the potential financial outcome and obligations. You need to ensure your financial position can absorb the additional financial commitments.
Debt Consolidation
Remortgaging can offer a solution for managing multiple debts. Combining debts allows homeowners to handle their obligations more efficiently, but it’s vital to proceed with caution as your property is at risk. Non-compliance with repayment duties can result in the loss of your home.
Funding Home Renovations
Remortgaging with the aim of funding home improvements is a popular option, especially for those keen on increasing their property value. Opting for another loan for home refurbishment can be beneficial, considering it can potentially increase the property’s worth.
Surviving Hard Economic Periods
Recent recessions have caused financial hardships for many. This may lead to job loss or illness, creating a need for additional funds to cover expenses. It’s important to remember that failing to abide by repayment agreements can lead to further financial difficulties, hence caution is necessary.
Unlocking Your Equity
During the mortgage period, if your home’s value increases, you might consider leveraging this by unlocking equity through remortgaging. However, bear in mind that this plan could potentially put your property at risk, hence decision making needs to be shrewd, not impulsive.
