Your mortgage is more than likely to be the biggest single expense in your household budget and one that has to be paid for anywhere up to 25 years, sometimes more.
With the pressure on household finances continuing it’s important to make sure that you’re getting the best possible deal on your mortgage. You could benefit from shaving significant amounts off your monthly payments by remortgaging.
The first thing you need to do is to review your current product. Check the rate and the term of any deal you are on. You also need to make sure there are no exit penalties that can be applied by the lender if you try to break out of the mortgage earlier than the terms allow.
Even if there are exit penalties to pay, it may be still be cheaper to move but you will need to calculate this very carefully to avoid being stung by high charges. You also need to check the fee on any new mortgage as some can be very hefty.
With interest rates historically low, mortgage rates are also very competitive so it’s potentially a good time to switch. However the best deals are reserved for people who have plenty of equity in their home and so present a lower risk to lenders.
Other benefits of remortgaging
Some people will want to remortgage so they can raise money. This can be more cost effective than borrowing any other way, for example using a loan or on a credit card, but you must make sure you can keep up the payments.
If you get a new, lower rate it may be possible to borrow extra money and still pay not pay much more than you do at the moment, but remember that your home could be at risk if you cannot keep up the mortgage payments.
Remortgaging may also allow you to extend the term of your mortgage for longer which has the advantage of making monthly payments cheaper, but will cost you more in the long run.
If you do get into financial difficulties then IVAs managed by Churchwood are a good way to manage your debt. An IVA allows you to pay off your debts with an affordable monthly payment. In addition an IVA comes with a guarantee that remaining unsecured debts will be written off after an agreed time normally 60 months.
What kind of mortgage should I get?
Anyone remortgaging will need to compare all the available mortgage products from different lenders. You will also need to decide if you want to lock into a fixed rate deal and for how long. Another option is to consider a discounted or tracker product, where you would benefit if the Bank of England Base Rate dropped even further, but pay more if it started to rise.
With some experts predicting that rates will stay low for many years to come, a lifetime tracker may be a good deal in the longer term.
Whatever the reason for a possible mortgage switch, it’s a fast moving market with new mortgages coming into play all the time and others being removed quickly, so you will need to act fast if you see a competitive product that’s right for you.