Remortgaging: Understanding the Benefits and Risks
Remortgaging can be a great way to save money on your mortgage and reduce your monthly payments. It can also provide you with some breathing room if you struggle to make ends meet. However, it is crucial to understand the risks and benefits of remortgaging before making the switch. Let’s discuss the process of remortgaging and the benefits that come with it. We will also talk about some of the risks of remortgaging and how a mortgage advisor can help you navigate them.
‘Your home may be repossessed if you do not keep up repayments on your mortgage’
Remortgaging is the process of switching your mortgage from one lender to another. This can be done for several reasons, but most people do it to get a better interest rate. When you remortgage, you may have to pay some fees to your new lender. However, these fees are often offset by the savings you’ll make on your monthly payments.
Benefits of Remortgaging
Several benefits come with remortgaging.
- Firstly, you can usually get a lower interest rate, than your current lenders standard variable rate.
- Secondly, if you struggle to keep up with your repayments, remortgaging can give you some breathing room. This is because you may be able to extend the term of your mortgage, which will reduce your monthly payments.
- Thirdly, remortgaging can also help you release some equity from your home. This can be useful if you need to make some home improvements or consolidate some debts.
Risks of Remortgaging
It’s true that there are numerous benefits of remortgaging. However, there are also some risks associated with remortgaging:
- Firstly, if you extend the term of your mortgage, you will end up paying more interest in the long run.
- Secondly, if property prices have fallen since you took out your original mortgage, you may owe more than your home is worth. This is known as negative equity.
- Lastly, if you miss any payments on your new mortgage, this could damage your credit score and make it more challenging to get a mortgage.
How a Mortgage Advisor Can Help
If you are thinking about remortgaging, speaking to a mortgage advisor is essential. They will be able to help you understand the risks and benefits associated with remortgaging and guide you through the process. They will also be able to find you the best deal possible, ensuring that you save money in the long run.
Current Trends On Home Owning And Mortgages
The current trends in home-owning and mortgages are changing rapidly. It’s becoming more challenging to obtain a mortgage, whether you’re a first-time buyer or looking to remortgage. Lenders are now much stricter with their criteria, meaning fewer people can get approval for a loan.
This is where a mortgage advisor can help. They will have a good understanding of the current market and available deals. They will also be able to offer advice on which products are suitable for your circumstances.