There are no hard and fast rules about when to remortgage your home. It’s not for everyone and people choose to remortgage for a variety of reasons, such as to save or raise money. Here are some of the common reasons why people take this course of action:
- Cut the cost of monthly repayments – top of the list is whether money could be saved by switching to a different lender. If the special rate period ends on your mortgage, it is usual for your mortgage interest rate to change and your monthly payments may increase. Switching lenders may bring the payments down, but you may find yourself in the same situation again once the new mortgage deal ends. If you do spot an attractive introductory offer, make sure you find out how long it will last and what your repayment options are likely to be when it ends.
- To raise money – many people choose to remortgage their home in order to raise funds to improve their current property, in the hope of increasing its long term value. Similarly, some may use the money raised to consolidate any existing debts. This is a particularly risky course of action and you should certainly consult a financial adviser before remortgaging for this purpose.
- Change in circumstances – if your circumstances have changed since you took out your mortgage and you can now afford to overpay your mortgage each month or you want to reduce your mortgage by paying off a lump sum then moving to another lender could be the best option. Some lenders also offer Current Account or Offset mortgages that will allow you to offset your savings and the balance of your current account against your mortgage debt.
Whilst a remortgage may have long term financial benefits, you may also incur costs from both your current and new lender during the remortgaging process.