Remortgaging has become common over recent years, particularly amongst people looking to save some money. In some cases it is better to remortgage than in others. While some people remortgage to save money others do it to release capital (or equity) from their property to pay for things such as home improvements or to settle debts. In this article, I will provide information on which must come first and how to go about remortgaging.
Should you really consider a remortgage?
The first thing you need to determine is whether you really need to remortgage and whether it is the best step for you to take. There are certain times when you should not remortgage even if it is something that you are considering. This includes:
- If you are not planning to stay in the property: If you are considering moving from the property in the next five years, you are better off not remortgaging. It will take up a lot of time and money because you won’t be in the property long enough to benefit from the savings. In addition, you will still have to pay for any fees connected to the new loan.
- If the savings are not worth it: Saving money is one of the main reasons for refinancing. However, before you take the plunge you need to work out the cost of remortgaging compared to the savings you will make. If the savings are not worth it then you should avoid remortgaging. You may also find that the figures don’t add up if you are remortgaging for interior remodeling or other home improvements – you need to work our whether the increased value is worth remortgaging for.
- You want to pay your mortgage off faster: Some people decide to remortgage because they want to pay their mortgage off more quickly. However, once you remortgage you are stuck with the new higher payment whether you can afford it or not. You may be better off sticking with your mortgage and making extra payments as and when you can so that you have some flexibility in case of financial emergencies.
- If you are considering switching to an adjustable rate mortgage: Another thing to be mindful of is the temptation of switching to an adjustable rate mortgage. These can be tempting because of the low rate of interest they offer for a specified period of time. However, once the interest rates go up your mortgage repayments will also shoot up, so this is something that you have to be mindful of.
- If your credit score is low: If you have damaged credit history and a low credit score, it probably isn’t a good idea to refinance. This is because you most likely won’t qualify for the lower rates, which means that you will have to make do with sub-prime loans, which come with higher rates of interest and increased fees.
If you fall into the above categories, it is probably not a good idea to remortgage. However, if you feel that you are in a position to remortgage and that it will benefit you, here is what you need to do.
Getting help through resources
If you are struggling to work out whether remortgaging is the best option, there are resources that enable you to get valuable advice and support such as Russell’s Solicitors. This can help you to gain valuable advice so that you can make a more informed decision with regards to whether you should remortgage or not. In addition, you can get financial assistance by reading relevant personal finance books, which make it easier to understand the ins and outs of remortgaging.
Applying to remortgage your home
Once you have decided that remortgaging is the right step to take, you need to start the remortgaging process. The first thing you need to do is some research to check out the best remortgage deals and rates. You can do this quickly and easily online. Of course, you can speak to your current lender but there is no guarantee that they will be able to offer you the best deal, so doing some online research yourself is essential.
It is also important to check your credit score before you apply, as this will give you more of an idea as to whether you are likely to get the loan. In addition, you need to do some number crunching and work out just how much you will save and whether it will be worth remortgaging. Once you have all the facts and figures sorted out, you can then press ahead with your remortgage application. You will most likely be able to do the application online, which can help to save you time.
