Your mortgage is probably your largest monthly expense and while it’s financially prudent to own a property, you should ensure your deal is the best it can be.
In this article, we’ll explain the fine art of the remortgage. Helping you understand when and why to explore your options, we’ll enable you to reduce your mortgage payments with a mortgage that suits you and your loved ones.
Let’s start with the why.
Why remortgage your house? Four key reasons
1. Reduce your mortgage payments
There are many reasons to remortgage, but the first and most obvious is to save money. This is particularly the case if you’ve been on a standard variable rate with your current lender for more than six months. Why? Because according to the Financial Conduct Authority (FCA), you could be better off if you remortgage.
One of the key reasons for this is that the rate you’re paying is rolled on automatically from your original deal. This is usually more expensive than other rates.
2. Take advantage of lower rates
Interest rates finally dropped to 5% in August, meaning mortgage rates are on the way down, too. And while it might be tempting to wait for further reductions, timing the market is difficult and you might find a deal today that isn’t available in a week.
So, if you spot a low rate mortgage deal you like, pounce on it quickly rather than waiting around.
3. Reduce risk
If you’re on a variable rate, your monthly payments will fluctuate depending on what happens to interest rates. While the outlook is positive in that regard, nothing is certain, so you might pay more than you expected at some point.
If you remortgage to a more suitable deal, however, you can achieve peace of mind from a fixed mortgage that won’t change due to interest rates. However, it’s important to understand any penalties of an early switch, so check your mortgage agreement before changing.
4. Lenders are tightening affordability criteria
Some mortgage lenders are becoming more stringent with their acceptance procedures and are reviewing their affordability criteria due to rising living costs. So, it may be more difficult to find a new mortgage deal if you wait too long, and you could be left out of pocket if you’re stuck with a variable deal rate.
When to remortgage your home
While many people think you need to wait for your current deal to end before remortgaging, this isn’t the case. Instead, you can usually secure a new deal up to six months before the end of your current one.
As well as saving you time and stress, you can usually roll straight onto a new mortgage without dealing with a higher variable rate between your old and new mortgage.
Generally, the remortgage process takes between six and eight weeks, but extenuating circumstances can elongate this. That’s why it’s better to start sooner than later and not leave it until the last minute.
Conclusion
Starting the remortgaging process before your current deal finishes is something we recommend, and you can save yourself a lot of time and money by doing so. It’s also highly advised to seek professional advice when remortgaging to find a suitable deal that works for you and your circumstances.
At Cedar House Financial, we have years of experience and expertise regarding mortgages, and vast access to the market puts us in a prime position to help you. Call our experts on 020 8366 4400 or email enquiries@cedarhfs.co.uk to find out more.