Remortgaging is the process of clearing one mortgage with the funds from another. As with anything, there are 2 sides to every coin and we’re here to show you both sides, the pros and the cons, so you can decide if remortgaging is the right and best move for you.
So, let’s start with the pros.
1. Lower interest rates
Swapping over to a new mortgage means you can compare all the best ones out there for you. This gives you ownership over interest rates, so you can ensure you’re paying as much capital and as little interest as possible! Especially important if you’re on a fixed rate mortgage, so if those interests sky rocket, you’ve scored yourself a low interest deal for the next 2 – 5 years!
2. Cashback
Some mortgages offer cashback upon signing with them as an incentive to make the swap. This isn’t a guarantee; however, you might just score yourself a few extra pennies and sweeten the deal. If you’re using a mortgage broker, they can get access to a lot more deals than the public, so worth keeping that in mind (but remember, they come with their own set of fees!)
3. Additional cash
One of the benefits that seem to spring to mind first, is using remortgaging as a way to take out equity from your property, giving yourself an extra cushion of cash. This can be both a pro and a con, so think long and hard before making this decision! You’re essentially taking money from your future self (if and when you go to sell), so unless you really need the money, it is worth considering leaving all your funds in the property and treating that as your investment.
4. Regain control of your finances
You may feel like you are paying over the odds for your home. Remortgaging ensures that you can find monthly payments you can afford. Just remember, if you increase the length of your mortgage, you will pay more in the long run.
Now onto the cons.
1. Increasing your overall cost
Stretching your mortgage out over a longer time may seem appealing as it can bring your costs down now, however, as mentioned above it can cost you a considerable amount more further down the line.
2. Repossession
To remortgage, you’re using your home as collateral, especially if you are withdrawing funds from your equity. So just keep in mind, as with any investment, if you fail to make payments, you run the risk of having your home repossessed.
3. Fees
Where you may be able to score yourself some cashback, the opposite may also be true. With paperwork comes fees, so make sure you read everything thoroughly. Some mortgages come with hefty fees which need to be paid upfront, others you can add the fee onto your mortgage (but remember, you’ll pay interest on that too!)
4. Time consuming
Remortgaging can take anywhere between 1 – 3 weeks, so make sure you’re willing to take the plunge before you fully commit!
Hopefully this has helped answer a few questions you may have had regarding remortgaging. Don’t forget, if you’re interested in finding out how much your property is worth, you can book in for a Free Valuation with us!
By Emma Thomas