If you have been wondering when you should consider remortgaging your property, then it may surprise you to know that you can actually remortgage for a new deal or even lender at any time. There are, however, fees that will need to be paid if you choose to switch before your current rate is up. Plus, you’ll need to consider any changes in interest rates.
What is a remortgage?
Remortgaging is when you take out a new mortgage on a property that you currently own. There are two main reasons that people consider doing this. The first is because they are looking to take advantage of a cheaper mortgage deal. The second is because they are looking to borrow money against the value of the property. This is often done to raise funds for renovation or extension work.
The remortgaging process sounds complicated. However, it is surprisingly easy when it is planned properly. Plus, it has the potential to save a good amount of money for the homeowner. A remortgage can be applied for at any point however, there is never a guarantee that you will be approved.
The best time to remortgage
Whilst you can apply to remortgage your property at any point there is no real point to switching mortgages just because you can. The best time to do this is when you will end up better of financially because of a remortgage.
The situation for all homeowners is different. However, these are the situations when it is worth considering a remortgage, and when it is most likely that one will be approved:
- You are on a fixed-rate mortgage deal that is coming to an end
- Interest rates are on the rise. You may concerned that you may miss out on a good deal if you don’t switch to a better rate.
- Interest rates are lower than when you took out your current mortgage. This means you are paying more; remortgaging could reduce your monthly outgoings.
- You have built up a considerable amount of equity in your home. This means it has gone up in value since you purchased. You may be able to access more competitive rates.
- If you want to make overpayments but your current mortgage lender will not allow you to
One of the most obvious times when you may want to remortgage is, of course, when your current deal is coming to an end. When this happens, your mortgage lender will move you to one of their standard rates. However, this is not usually the best deal out there for you. Sometimes you may find a preferential rate with your current lender. However, it is often worth shopping around to see what is on offer with other lenders.
Some mortgage deals, particularly tracker mortgages and fixed-rate ones, are fairly short and only last 2 – 5 years. If you are looking to remortgage because you are coming to the end of your current deal, then you should start looking around 3-4 months before it ends.
Whatever you decide to do, it is important to remember that your home may be at risk of repossession if you do not keep up your mortgage repayments.