The time has come… to remortgage

Ideally homeowners should take a long, hard look at their mortgage every year and see whether remortgaging would indeed save them money. Although possible penalty fees and administration/legal costs may be offputting, if you find the right deal then biting the bullet and paying a one-off lump sum now could actually save you money in the future, and keep in mind that there is no costly stamp duty to pay this time round.

If you have a nagging feeling that you might be better off changing to a new deal, then the following 10 reasons to consider remortgaging your property could answer the burning questions you’ve been reluctant to ask:

You don’t know what’s out there

If you have been sitting on the same mortgage deal for a fair few years now, it is a prime time for you to shop around. You may not be actively looking to remortgage right now, but thinking about it and getting a feel for the current market may throw up some very attractive options that you didn’t know existed. This is an especially good idea in the wake of the recent interest rate rises, as many providers are looking to keep hold of their customers while others start a mortgage bidding war to attract new ones.

You are coming to the end of your current deal

If you are fast approaching the end of your current mortgage, make sure that you don’t get lazy and resolve to ‘deal with it later’. You need to think about switching to a new mortgage in plenty of time so you’re not caught out and don’t get sucked into your lender’s high Standard Variable Rate (SVR). Similarly, don’t be tempted to increase the length of your existing mortgage term as it will probably cost you a lot more in the long run.

Find a new mortgage deal

You can bypass costly redemption penalties

Redemption penalties and pricey exit fees are very important factors to consider when remortgaging as charges will be entirely dependant on how long you have been tied in to your current deal, as well as the time period it was initially fixed over. Some lenders have already scrapped them, but if you succumbed to an attractive initial deal you may end up forking out a considerable amount to release yourself from it. Usually most fees work out to be the same, irrespective of the actual loan size so the best rule to adhere to is; the smaller your mortgage, the less sense remortgaging will probably make.

A better rate at the same monthly cost

Most mortgage deals tend to benefit new customers so by switching to a different lender you could end up saving money. Lenders are hungry for your business and many have subsequently developed special deals that mean they will pay out for the valuation, and even pay your legal fees. Dodging fees while finding a better deal can help to rule out any nasty ‘terms and conditions’ which could come back to bite you the next time round.

You’re sure you can get a better rate elsewhere

As we spiral towards January, most lenders pull out all the stops in order to hit their end of year targets. For this reason a lot of them will launch attractive new deals in the lead up to Christmas, so you are quids in to make a killing. Be prepared to move fast though, as it’s a case of blink and you’ll miss it.

Find a best-buy mortgage

You feel you could benefit from debt consolidation

This is a risky business as you are putting other debts against your home, not just the amount you are borrowing for your existing mortgage. It can however offset heavy interest rates on a personal loan or credit cards, and consolidate your debt into one easy monthly payment. This payment is likely to be lower than you were shelling out for before, largely due to the fact that it is over a longer term, and it’s important to remember that paying back a motor purchase over the life of your mortgage ends up becoming very expensive. In this case, you should arrange to pay down that part of the loan more quickly otherwise you may still be paying for your car 10 years down the line.

Making that dream investment

Your house price has probably seen a bit of an increase over the past year or so, and remortgaging your property can release extra cash which you can put towards a solid investment. Buy-to-let investments can feel like a great leap into the unknown, but in a lot of places it is now cheaper for people to carry on renting rather than getting a foot on the property ladder, meaning that demand is high. By freeing up the cash and switching to a lender who looks favourably on the fact that you will use their services for both your existing property and your buy to let investment(s), you may get an even better deal than you were expecting. At the same time this will generate the revenue you are looking for to fund other projects, or just to pay off your existing mortgage at a quicker rate.

How much is your house worth?

You’ve just been given a payrise

Ploughing extra cash into your mortgage may not seem like the most exciting idea when you’re still glowing from a hard-earned payrise, but it could allow you to shorten your mortgage term. Paying that little bit more now can give you extra freedom and lessen the overall interest building up on the amount you have borrowed to date.

Dodging the blow of rising interest rates

If you took out a low fixed-rate or tracker deal around two or three years ago, you may now be in the firing line due to the recent interest rate rises. Unless you have managed to avoid defaulting onto your lender’s SVR, switching to a new fixed-rate mortgage will really come up trumps, especially as many market commentators are predicting definitely one, possibly two, further increases over the course of the next year.

To avoid moving home

Whatever your reasons for moving, it may prove more cost effective to release some of the equity already stored up in your home and put it towards re-modelling instead.

Remortgaging will allow you to raise the extra money for an additional bedroom or a state of the art conservatory, and at the same time avoid upping sticks from a home you love.

It pays to watch out for over-improvement though, as a four-bedroom house in a row of two-bedroom ones could prove harder to sell and cause more stress in the long run, however exciting a development it seems in the short term.

Compare mortgages here

Whatever your circumstances, don’t fall prey to rushing out and grabbing at the first semi-attractive deal you can find. Instead seek the advice of a trusted, independent adviser who will assess your particular situation, irrespective of external factors, and go through a full long-term risk assessment with you.

If you are hunting for a bigger loan more often than not you will find the higher fee/lower rate deals more attractive, while borrowers with loans under £100,000 will usually find lower fee/higher rate deals better suited to their needs.

Ultimately, one of the biggest things to consider if you are taking the plunge and switching your mortgage is that you don’t suffer from payment shock when your fixed rate or introductionary discount finishes. You also need to take into account the valuation fee, any legal fees and a possible Higher Lending Charge (HLC). Make sure you enter into your new mortgage with your eyes open and explore all possible negatives alongside the positives.

You can remortgage as many times as you like, whenever you like, but make sure that you are fully prepared for a bit of a wait as it can sometimes take a while to sort out a new deal. In the majority of cases though, the whole thing can be done and dusted in a week, sometimes even in a matter of days, leaving you with plenty of time to bask in the smugness of the savings you’ll make.