Britain is now a country of homeowners... Unfortunately, 40% of UK homeowners just keep their standard variable rate mortgages without knowing that they could save a lot of money by switching.
If you are paying the standard variable rate with your lender or are about to lose a special rate, you might be able to find a lower rate of interest from another lender. You could pay less each month if you renegotiated the interest rate.
So, let's say:
If you already have a GBP220,000 interest-only mortgage with a standard variable rate of 6.5 percent, your monthly payment would be GBP1,191.
If you switched to a remortgage package with a fixed rate of 4.49 percent for two years, you would only have to pay GBP823 per month in interest.
That's a monthly savings of GBP368. Over the two-year term, that's a huge savings of GBP8,800.
Remortgaging your home can save you money, but it can also give you other options that may be better for your financial needs. For example, you might be able to pay off your current mortgage early, get more money, or even combine your debts.
To pay off your loan early:
If we were all honest, no one really wants a mortgage, and the sooner you can get rid of it, the better. If you pay it off early, you'll have more time to save up for the things you really want, like a big family vacation, a new car, a nice conservatory, etc.
With some smart remortgaging and switching to a lower interest rate while keeping the same monthly payment amount, you might be able to cut years off the length of your mortgage.
But keep in mind that your current mortgage may have fees for paying it off early, especially in the first few years. Even if there are no fees for paying it off early, your mortgage lender may charge you an administration fee.
To raise extra money:
Remortgaging is often a cheaper and more flexible way to get money for home improvements or other purchases than getting a personal loan. Home improvements and updates are often a lot cheaper than moving, and they can also raise the value of your home.
To get rid of all your debts at once:
By remortgaging, you can free up some of the equity you have in your home, which can be used to pay off debts like credit cards or car loans. Most of the time, the rate on a remortgage package is much lower than the rate on a personal loan.
But before you choose this option, you should carefully think about the risks of turning unsecured debt into secured debt and any changes to the length of time you have to pay back the debt.
