Getting a mortgage is one of the biggest financial undertakings you’re likely to make. But this big financial undertaking comes with a big chance to save money along the way with a few clever hints and tips.
One way you can save money on your mortgage is by remortgaging. Remortgaging doesn’t involve moving house, or taking out a second mortgage. It’s when you switch to a new deal either by switching to a new mortgage with your existing lender, or to a new lender altogether.
It can be a good idea to remortgage for various reasons. The most common reason is to reduce your overall monthly mortgage payment amounts. But it may also help you pay off your mortgage earlier and can offer you greater flexibility if you need.
So how can remortgaging do this?
Firstly, it’s likely that when you first took out your mortgage you were able to get an introductory deal. This could have meant a low fixed rate, or a low tracker rate. These types of mortgages are generally only short-term – between two and five years. Once this deal ends you’ll be moved onto your lender’s SVR (Standard Variable Rate). This will usually be higher than other rates you can get. At this point, remortgaging could get you onto a better deal.
Our section on residential mortgages gives you more information about mortgage types.
It’s also possible that the value of your property has gone up since you bought it. If this is the case, your loan-to-value (LTV) rate – your outstanding mortgage amount divided by the value of your home – could be less, which means you could be eligible for far lower rates than you’re currently on.
It might also be that your circumstances have changed. Perhaps you’ve had a pay rise, or lost your job. Maybe you want to go travelling, or are going back into education. There are mortgages out there that can give you the option to overpay, underpay or take payment holidays, which allows you to skip payments within reason. There are also offset or current account mortgages available, where you use your savings to reduce the amount of interest you pay permanently or temporarily – with the option to draw your savings back if you need them.
Mortgages can be tricky to get your head around and there’s a lot of options out there. It’s always a good idea to get expert advice when looking to remortgage. An independent mortgage broker can help you decide whether remortgaging is for you, and can come up with different mortgages to look at. In a few cases, if you don’t have much of your mortgage to pay off, it might be that the fees to exit your current mortgage will mean remortgaging isn’t the right decision for you.
Using a broker also affords you an extra level of protection as their advice is be protected by the Financial Standards Authority (FSA), something you won’t get if you just phone a lender’s call centre.
We offer personalised service whether you’re a first-time buyer, or have had your mortgage for years, and can offer you access to the best possible mortgage rates.
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