Remortgaging or refinancing your existing mortgage
Remortgaging, or refinancing your existing mortgage, is increasingly becoming of high interest to homeowners because of the fact that there are always new and better deals becoming available on the marketplace. By keeping a keen eye on fresh and competitive offers, you might find yourself significantly benefitting financially from the switch.
There are a number of crucial reasons why people choose to refinancing their existing mortgage. Some homeowners use it to consolidate all their debts into one tidy payment. Another reason is that remortgaging your home could provide a cash back that can be used either to add improvements to your property or to cover existing debts.
The following article gives you the main points to consider when looking to remortgage.
Weighing all sides carefully
All the experts agree that it is essential to firstly take your time doing the right research. Make sure you weigh your current mortgage features and benefits against any new offers that become available. Sometimes a great new deal on the surface can actually set your pocket back when you consider the smaller print. For example, some lenders have pricey hidden fees underlying what seems to be a fabulous rate. Other lenders extract costly penalties in the event you want to close your original mortgage, so that you lose out financially should you switch to a competitor. It's always a good idea to use a mortgage repayments calculator when doing your research to really make sure a remortgage is the way to go.
An expert might be worth it
For many, financial decisions are boring, bothersome and confusing - this can make choosing a good deal that really benefits you rather risky. If this is the case, you could be best served by opting for a remortgage specialist, since while their fee is an added expense, they might end up saving you a significant amount of money by recommending the perfect package. In particular, the two foremost scenarios warranting a specialist are regarding loans from gifted properties and retirement funds. In the first case, if you've been given a property, it will be yours outright apart from the related taxes owed. An expert can help arrange a loan for you based on the value of your gifted home, so that a portion of the asset is applied to the debt you owe. Secondly, if you're nearing retirement but are worried about your cash liquidity when you no longer have a regular paycheck, a specialist can help you convert some of your home equity back into cash. A remortgage specialist, if you do your homework and find one who is experienced and reputable, can in many cases more than make up for their cost.
The option of remortgaging with your current lender
While mortgage competitors may offer you a seemingly better deal than the one you have with your current lender, again it's important to read the fine print to make sure this is in fact the case. Sometimes, refinancing your existing mortgage with your current lender can be the right move, especially for first time remortgages. This is because with them you have already built a track record, so they might want to offer you a good new deal to remove the temptation of your switching to one of their competitors. This is particularly true if you have a squeaky clean repayment record.
Choosing the loan type that fits
Once you've taken the important step of deciding on the right lender for your remortgage, the next crucial choice is a loan type that matches your needs and circumstance. If you're looking to get a lower interest rate, a fixed mortgage spanning 15 or 30 years would be a good choice. If your reason for switching your current mortgage is to get a cash back, the equity in your home will be the cash from the loan so you will need to get a home equity line of credit. Many home owners choose to remortgage so they free themselves of an ARM, or adjustable rate mortgage, which can be subject to rate increases. Above all, have your lender explain the in's and out's of each type of loan so that you clearly understand what you're getting yourself into.
Check the fees on closing your existing loan
Before you go ahead and close your existing mortgage loan, make sure you read the fine print to ensure you won't get hit by costly termination fees which could put a severe dent the savings you might make on going forward with a remortgage.
The above remortgaging tips will help you make the right choice when deciding whether or not to take out a remortgage. Above all, the experts agree that sound research is essential to make sure such a large financial step is truly going to benefit you.