The goal of remortgaging is to switch to a better deal that saves you money, gives you more freedom, etc., whether that means staying with your current lender or switching to a new one.
What are the pros of getting a new mortgage?
When you remortgage, you can get out of a mortgage that doesn't work for you and switch to a better one, like a fixed-rate, tracker, or discount mortgage, which can give you better rates. When you remortgage, it's just as important as the first time to find the best deal for you. Your prediction of future interest rates, your own risk assessment, your income, and the amount of the loan that is still owed should all be taken into account. You will also need to think about your financial needs and the way things are right now.
You can also get away from a bad lender with a bad credit remortgage, since there is no rule that says you have to stay with the same one.
If you do either of these things when you remortgage, it could cut your monthly payments by a lot. This is just one good thing about remortgaging.
Say, for example, you have a loan of $100,000 and are paying interest at a rate of 7.5%. You then switch to a different lender whose interest rate is only 7%. This would mean that you would save $31 every month, which is almost $400 a year.
Sometimes the money that's sitting around in the house could be used better somewhere else. Remortgaging lets you use some of your home's equity to start a new business or buy another property for a price that is more than what you need to pay off your original mortgage.
How long will it take to do this?
Remortgaging is usually faster than getting a normal mortgage, but slower than getting a bad credit loan because you aren't buying a house. Without taking into account specifics, the whole process should take an average of six weeks.
How Much It Costs To Refinance
As with your first mortgage, a survey will need to be done to confirm the value of your home, since the first one is no longer valid. Add to this the cost of a lawyer and any administrative fees. These costs will be lower than the first time you mortgaged, and your lender may be able to recommend people who work with them who can help lower your costs.
There may be fees if you pay off your mortgage early. This is when you have to pay a fee if you pay off the mortgage within a set amount of time after it starts. This could be an extra payment of three to six months or a certain amount of the loan.
When figuring out how much a remortgage will cost, you should also consider how much money you could save in the long run.
Action Plan in a Hurry
If you're still not sure if remortgaging could work for you, think about the following:
First, talk to your current lender and ask for a statement of redemption. This shows what, if any, fees you will have to pay if you want to remortgage. It also shows how much you still owe on your current mortgage.
When looking at a remortgage deal, make sure you read all the fine print and ask the lender to show you exactly how much you would have to pay back. Always get something in writing so you can use it as a reference.
Add up all the costs you'll have to pay if you get a new lender, such as the fees for setting up the loan and running it. You should also add on legal fees, which will be different depending on where you go and how much your property is worth.
Armed with these facts and numbers, you should then decide if remortgaging will be good for you and if the savings in the long run will be worth the costs in the short term.
