The Many Good Reasons Why A Remortgage Is The Best Financial Choice

Remortgaging your home involves switching your mortgage provider without moving house. It also gives you a great opportunity to benefit from a lower interest rate or to borrow some additional money against your home. Whether you want to consolidate debts, undertake home improvements or simply get a better deal on your home loan, our guide looks at the most common reasons that people remortgage.

Getting a Lower Interest Rate: After a certain time in your mortgage, you may find that you are put onto a standard variable rate, or that the interest rate you are paying is higher than you can obtain elsewhere. This is one good reason to remortgage, as you can get a much better deal by switching to a new product.

Home improvements come in all shapes and sizes. You could be considering some basic painting and redecoration or want to completely refit your kitchen or bathroom. You may even want to undertake a major project such as adding a hot tub or a swimming pool to your garden.

A remortgage can also be used for improvements such as replacing your windows and doors. As well as helping you save money on your heating bills, new windows can be more secure and can increase the saleability of your home. And, if you need more living space you could use a remortgage to find the construction of a conservatory or extension.

Finding a Better Deal: Many home owners remortgage to access a better mortgage rate. For example, if the fixed rate mortgage that you currently have comes to the end of its fixed rate period, you might want to get a remortgage to access a fixed rate deal rather than returning to the previous standard variable rate.

As well as helping you to reduce your monthly mortgage repayments, a remortgage can also help you find a mortgage deal more appropriate to your circumstances. For example, you may now want a fixed rate product or a remortgage deal because of changes to your financial situation since you took out your last mortgage.

Debt Consolidation: Another common reason for remortgaging is to raise cash in order to consolidate other debts. For example, if you have credit cards or personal loans it can be beneficial to reduce your interest and your monthly outgoings by consolidating them into your mortgage. Bear in mind that whilst your monthly repayments may reduce you may pay more interest in total as the borrowing is taken over a longer term.

The flipside to this, is the fact that in the short term your monthly bills will be reduced. If you have a store or credit cards with an APR of 20% for example, the rate can be cut to 5% or 6% by consolidating it onto the mortgage. This will take a huge burden from your shoulders financially, especially if you have numerous debts like this.

You can work out your savings and total interest costs by comparing your remortgage deal to your personal loan or credit card payments. A mortgage broker or financial advisor may be able to help you with these calculations.

Buying Additional Property: Many people dream of owning a second home or a holiday home, and taking additional funds with a remortgage can help you to make your dreams of owning another property a reality. You can use the funds as a deposit on a second mortgage, or if you have enough equity in your property and the purchase cost is low enough you may be able to pay it all in one go.