Whether you’re knowledgeable in the housing market or not, you have likely heard of the term ‘remortgage’. A remortgage can be a very beneficial tool for a variety of reasons and can serve to make your money more flexible in its use. Read on to find out what remortgaging is, when it can be used and its advantages and limitations.
What is Remortgaging?
In simple terms, a remortgage is a regular mortgage that is placed on a property that you already own. This means that it can be applied at numerous points within the original mortgage term or even long after the mortgage has ended. A remortgage functions in the same way as a basic mortgage with its borrowed amount, term and interest rate. But, due to having been taken at a later point, it offers the chance to change these factors to make the repayment more practical or increase saving potential on the side.
When Can You Remortgage?
The main benefit of a remortgage is the flexibility it offers and can be taken out at almost any point during or after the mortgage term. Just like the original mortgage though, you will need to be vetted by the bank or lender to ensure that you can pay back the loaned amount, as well as the checks to make sure that you have a valid reason for taking another mortgage out. As long as you meet the criteria, you should be able to remortgage your property at almost any point.
Benefits of Remortgaging
- You can extend the term of the mortgage giving yourself lower monthly payments allowing you to funnel the money toward something else.
- By looking to get a new mortgage you can find deals that will make the process cheaper than your current plan.
- On average the rate of a mortgage is several times lower than that of a personal loan or credit card meaning that you can borrow more money at lower costs of return.
- Switching up on your mortgage may allow you to make larger repayments, usually, this is either charged or prevented altogether but with a remortgage, you are able to find plans that allow you to do so.
Limitations of Remortgaging
- Depending on your current mortgage you may be unable to opt-out or change plans.
- Valuation and legal fees can accumulate leading to a high up-front cost.
- Stretching debts leads to a higher overall cost.
Overall, a remortgage is a great option for consolidating debts and altering them to match your financial situation. They aren’t the perfect option for everyone but maybe worth speaking to a lender or advisor about.
Looking for Mortgage Advice?
If you’re looking for advice on mortgages or remortgaging, then please get in touch with an independent mortgage advisor. SJ Financial Solutions are leading providers of mortgage and financial advice and they can walk you through your options.