Is Remortgaging Right For You?


With the UK in a recession, it is vital people review their finances. If you own a mortgage, and you are concerned about the costs of this mortgage, you might want to consider remortgaging the property.

Paul Stringer is a Director of the Norton Finance Group, and he is a noted name when it comes to remortgage advice. He explains what remortgaging is by saying; “Essentially, remortgaging is where you look to agree on new payment terms with your current or new provider. A mortgage is one of the biggest financial commitments many of us have, but there is no reason why you need to stick with the same deal. It could be a chance to secure a better deal with better payment structures or interest rates, which could reduce monthly expenses. It could also be a way to raise money for things like home improvements.

Reasons people consider remortgage include:

  • To release equity
  • To renegotiate their payment structure
  • To save money
  • To move to a more attractive rate

Paul Stringer also said; “Mortgage rates continually change, the Bank of England base rate, which most mortgages are priced by, is currently historically low. It could be possible to save a lot of money on monthly repayments and overall loan costs by having a look around for a different rate. However, be sure to check your current deal as early repayment charges could be in place for leaving early.

Is remortgaging right for you?

Remortgaging isn’t the right solution for everyone, and the following drawbacks should be considered:

  • A decrease in the value of your property could hamper you when remortgaging
  • People who haven’t repaid much of the mortgage since they bought it might be hampered when remortgaging
  • People whose financial circumstances have worsened since arranging a mortgage might not benefit from remortgaging

Paul Stringer, spoke about these points, saying; “There has been a decrease in the value of your home – borrowing a lump sum against a house in this instance could mean you’ll end up paying more than the value of your house over time. If you haven’t been able to repay much of your mortgage value since purchase, say if you are on an interest-only plan – in this instance your monthly repayments could rise if you remortgage. If your financial circumstance has worsened since you first bought your house, it is likely you won’t get improved terms. Remortgaging offers are based on your financial situation, just as it is with an initial mortgage application, so your salary, employment, and credit scores are all considered by lenders.

You must consider the costs of remortgaging

While remortgaging makes property ownership more affordable for many people, there are costs associated with this process. Before you commit to remortgaging, you need to review the costs of doing so, and make an informed decision as to whether it is the right move for you to make.

Paul Stringer, also said; “There is also a likelihood that there will be a cost involved in applying for a new one. Termination of an agreement will likely lead to fees; this is known as an early repayment charge. This is where you must pay your old lender for a portion of the interest they will lose out on. In the long run remortgaging may save you money but consider if you are able to afford to do it now. Some lenders might charge admin fees for any changes to a contract.

Therefore, you must ensure you can afford the upfront costs associated with remortgaging, as well as the longer-term on-going costs.

While there are new challenges to overcome in the housing market, people shouldn’t consider arranging a mortgage to be an impossible task. However, it is vital people accept help and assistance from professionals in the field. If you are keen to arrange a mortgage, speak to a mortgage broker or experienced adviser and make sure you are fully equipped to make an informed decision.

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